Chapter 1: The Scene of the Crime
Your weekly excerpt from one of my books. This week: "Who Killed the American Dream: The Greatest Political Crime Ever Told"
The Scene of the Crime
The crime took place in Washington, DC, but its seeds were planted in California, where the most powerful corporation in America was waging war against democracy itself.
The Dawn of the First Progressive Era
To truly grasp the scope of the crime of 1886, you first have to understand what America was becoming at the time, and what the oligarchs were desperately trying to stop.
The 1880s started what historians would later call the First Progressive Era. After decades of unfettered corporate power following the Civil War, leading to brutal practices against workers, Americans were finally waking up and organizing. This rise of the new power of labor and communities demanding progressive changes had that era’s oligarchs terrified.
By 1886, the Knights of Labor had grown to seven hundred thousand members, which made it the largest labor organization in American history. Workers, who’d been treated as disposable, were discovering their collective power and demanding an eight-hour workday, safer working conditions, and an actual living wage so they could support their families with dignity.
States were also beginning to regulate corporations in serious ways. These included new laws that limited working hours, required basic safety standards in factories and mines, and taxed corporate property to fund public schools, roads, mass transit, and other infrastructure that would benefit ordinary citizens beyond just the morbidly rich.
Farmers were organizing into state-based cooperatives, pooling their resources to escape the stranglehold of the railroad shipping monopolies and grain elevator cartels. The Grange movement had already won major victories in several states, confirming the newly recognized principle that state governments had the power to regulate corporations by citing the “public interest.”
In short, the seeds of the American Dream—the promise that hard work would be rewarded with security and dignity, that ordinary people could own their own homes and businesses, that children would have opportunities their parents never had—were just beginning to sprout. The Progressive Era that would transform America and create the world’s first widespread middle class was dawning.
The oligarchs and “conservative” politicians of that day well understood what was at stake. If this movement succeeded, if workers gained real power, if states could effectively regulate corporate activities, if taxes on the wealthy funded public goods that lifted all boats, then the era of rampant, unchecked corporate dominance would end. The railroad barons, the steel magnates, and the banking titans (among others) who’d accumulated unprecedented fortunes would have to share that power with America’s democratic majority.
The oligarchs thus needed a weapon to fight back. They searched for years and finally found it in the Fourteenth Amendment, written to protect freed slaves but now soon to be perverted to protect corporate profits and oligarchic wealth.
The Railroad Oligarchs
In the 1880s, the Southern Pacific Railroad wasn’t just a company: it essentially functioned as if it were a government unto itself.
The railroad controlled California’s politics completely. Its executives owned senators, judges, governors, and newspaper editors. It had its own police force, its own courts and jails, and its own laws. When the railroad wanted something, the railroad got it. When it didn’t want something, that thing didn’t happen.
The men who owned the Southern Pacific—Leland Stanford, Collis Huntington, Mark Hopkins, and Charles Crocker, known as the “Big Four”—were America’s first oligarchs (other than the Southern plantation owners who’d tried to overthrow democracy and were defeated in the Civil War). They weren’t just rich; they wielded their wealth as a weapon to bend local, state, and even the federal government to their collective will.
Stanford would later found Stanford University, laundering his reputation through philanthropy, the way many oligarchs have done ever since. But that came later; in the 1880s he was a railroad baron who saw democracy as an infuriating obstacle to ever-increasing profits and a challenge to his own personal wealth and political power.
And his railroad had a problem. California counties, under pressure from voters, were passing legislation that taxed railroad property to pay for public improvements including schools, roads, and bridges. The railroad barons, incensed, called this theft. They’d built their empires via federal land grants (Lincoln gave them tens of millions of acres during the Civil War), political corruption, and absolutely ruthless business practices. The idea that local communities could tax them to fund the common good seemed, to these railroad oligarchs, like an outrageous violation of their rights.
Most importantly, those taxes weren’t just about revenue; they were also about power. They were about democratic communities saying out loud that they could control the corporations that operated in their territory. They claimed that corporations existed to serve public purposes, not the other way around.
If California could tax the railroads to fund public schools, the oligarchs reasoned, then children of workers might get educated. Educated workers would know how to demand better wages. Better wages would cut into railroad profits. If these affronts were allowed to stand, the whole system that kept the oligarchs on top might start to unravel.
So, Stanford and his buddies decided to manufacture a constitutional right that didn’t exist: the right of corporations to be treated as “persons” under the Fourteenth Amendment. It was a preemptive strike against the Progressive Era before it had even fully emerged.
The Amendment Written in Blood
The Fourteenth Amendment was ratified in 1868, just three years after the Civil War ended. Its purpose was singular and clear: to guarantee that freed slaves would be recognized as full citizens with constitutional rights.
Section 1 contains the key language: “No State shall . . . deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”
Over six hundred thousand Americans died in the Civil War; the Fourteenth Amendment was drafted in their blood. It was meant to ensure that the Black Americans for whom the war was fought would be protected by the Constitution. It was meant to guarantee that the promise of America—that all men are created equal, that every American deserved a chance at what Jefferson called “life, liberty, and the pursuit of happiness”—would finally apply to all Americans, regardless of the color of their skin.
The amendment carried the potential for real power, and it had already begun to transform the nature of America through Reconstruction, so the railroad oligarchs decided to exploit and corrupt it for their own purposes.
They’d tried before. During the first two decades after the Civil War following its ratification, corporations brought case after case to court, arguing that they were “persons” entitled to Fourteenth Amendment protections and thus access to the Bill of Rights (the first ten amendments to the Constitution). They lost. Repeatedly.
For example, in 1877, in Munn v. Illinois, the Supreme Court explicitly rejected the idea that corporations had the same rights as natural persons. Chief Justice Morrison Waite wrote for the majority that corporations were subject to “regulation . . . for the public good.” Although they had a limited form of what today we’d call artificial personhood so they could sign contracts and pay taxes, they were not protected as if they were human persons under the Fourteenth Amendment.
That decision was a victory for democracy. It affirmed what the Founders understood: that corporations are creations of law, subject to democratic control, not autonomous entities with the same “inherent rights” recognized for humans in the Bill of Rights. It meant that each of the states could regulate businesses in its own way, tax them fairly, and require them to serve the public interest.
If Munn v. Illinois had remained the law of the land, the reforms of the Progressive Era that followed might have been easier to achieve and harder to reverse. The American Dream might have taken root even earlier, and today we’d probably be far ahead even of Europe’s most progressive democracies like Norway and Denmark, since we would have had such a huge head-start.
That failing, the oligarchs needed a new strategy.
The Tax Case
In 1882, the Southern Pacific Railroad simply stopped paying property taxes in several California counties, claiming the taxes were illegitimate. The counties sued, and the railroad fought back with an entirely new legal argument.
They claimed that those California counties’ tax assessment methods violated the Fourteenth Amendment because they treated railroad property differently from other property, and that different counties had different tax rates. This “unequal protection,” they argued, violated their rights as “persons” under the Constitution.
The case was Santa Clara County v. Southern Pacific Railroad Company. It worked its way through the lower courts for four years and finally reached the Supreme Court for the 1885/1886 term.
The railroad had advantages that most litigants lack. They had unlimited money for legal fees, political connections to judges and politicians, and, most importantly, they had something else: a friend on the Supreme Court itself.
US Supreme Court Associate Justice Stephen J. Field was a Californian who’d made his fortune during the Gold Rush. He owned railroad stock, socialized with railroad oligarchs, and believed, passionately, that corporations deserved constitutional protection from democratic governance.
Field’s vision could be described as feudal. Like Edmund Burke generations earlier, he believed a small class of property owners should rule America, protected by the Constitution from the whims of the democratic majority. Wealth, he believed, was proof of goodness, wisdom, and competence, and poverty was a failure of the will.
The emerging middle class of the late mid-nineteenth century threatened this vision, in Field’s view. Workers organizing into unions, farmers forming cooperatives, small businesses openly fighting the monopolies: all of this had to be stopped.
Field had been waiting for the right case, and Santa Clara would be it.
It started in 1883 because back then Supreme Court judges also “rode the circuit,” working in their states as chief judges of the appeals courts most months of the year, and just spending a few months every year in Washington, DC, as justices of the Supreme Court.
So, in 1883, that case first came before Field in his capacity on the 9th Circuit Court of Appeals. He ruled in favor of the railroad, writing in his decision:
The Fourteenth Amendment of the Constitution, in declaring that no State shall deny to any person within its jurisdiction the “equal protection of the laws,” imposes a limitation upon the exercise of all the powers of the State which can touch the individual or his property, including that of taxation.
The “equal protection of the laws” to any one implies not only that the means for the security of his private rights shall be accessible to him on the same terms with others, but also that he shall be exempt from any greater burdens or charges than such as are equally imposed upon all others under like circumstances. This equal protection forbids unequal exactions of any kind, and among them that of unequal taxation.
Once Santa Clara County appealed their loss in the 9th Circuit, the case came before the US Supreme Court with Field himself as one of the men sitting in judgement.
The Oral Arguments
On January 26, 1886, the Supreme Court—with Justice Stephen J. Field in attendance—heard oral arguments in Santa Clara County v. Southern Pacific Railroad Company. J.C. Bancroft Davis, the Court’s official reporter, took the notes, as did the county’s lawyer, Delphin Delmas.
The railroad’s lawyers made their pitch, echoing Field’s decision in the 9th Circuit case: “The Fourteenth Amendment protects ‘persons’ from unequal treatment. Corporations are persons. Therefore, California’s unequal tax assessment violates the railroad’s constitutional rights.”
The county’s lawyers countered: “The Fourteenth Amendment was written to protect freed slaves who are actual humans, not railroad corporations. The framers never intended to grant constitutional rights to corporate artificial entities created by state law.”
Then something weird happened.
Chief Justice Morrison Remick Waite interrupted the arguments. According to court records, he made an announcement: “The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does.”
The county’s lawyer, trying to argue against the railroad’s assertion that they were “persons” protected by the Fourteenth Amendment’s Equal Protection Clause, was essentially told not to bother. The Court had already decided.
Or had it?
The Decision That Wasn’t
On May 10, 1886, the Supreme Court laid down its decision in Santa Clara County v. Southern Pacific Railroad Company.
Justice John Marshall Harlan wrote the majority opinion. It’s a technical, somewhat boring ruling about fence valuations and tax assessment procedures. The Court found in favor of the railroad, but not because of the Fourteenth Amendment; instead, it ruled that California had illegally included the value of the fences along the railroad right-of-way in the land’s assessment in violation of its own laws.
Here’s what Justice Harlan actually wrote in the Santa Clara opinion about corporate constitutional rights: nothing.
The Court’s decision explicitly avoided the constitutional question. The Court instead ruled on narrow technical grounds having to do with California tax law that had nothing whatsoever to do with whether corporations were persons under the Fourteenth Amendment.
In fact, Harlan’s decision begins by noting that since the Court could dispose of the case on other grounds, “it is not necessary to consider” whether the Fourteenth Amendment applies to corporations.
It doesn’t get more explicit: “it is not necessary to consider.”
The Supreme Court explicitly refused to rule on corporate constitutional rights.
So where did the idea that Santa Clara established corporate constitutional rights come from?
The Headnote
J.C. Bancroft Davis was the Supreme Court’s Reporter of Decisions, what we today call the court reporter. His job was to take notes and then publish the Court’s written opinions in officially sanctioned volumes, adding brief headnotes to summarize each case.
For Santa Clara, Davis wrote: “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 sentence appears before the decision itself. It looks official. It’s printed in the United States Reports, the official record of Supreme Court decisions.
But it’s not part of the decision. It’s not law; it’s just Davis’s statement. And Davis’s statement directly contradicts what the decision actually says.
The decision itself said the Court was definitely not deciding the corporate constitutional rights question: it was “not necessary to consider” because they were only going to rule on whether the county illegally counted the value of fenceposts when calculating the value of the land for property taxes.
The headnote, on the other hand, explicitly says the Court decided that corporations are persons.
One of them was clearly and blatantly lying. And since the decision was the official ruling of the Supreme Court, written by Justice Harlan and agreed to by the other justices, the liar had to be Davis.
Davis, we now can see, put words in the Court’s mouth—words the Court never said, using language that would alter the course of American history for more than a century.
The question is why?
The Cover-Up Begins
Within months of the publication of the Santa Clara decision, lawyers for corporations began citing it as precedent for corporate constitutional rights, pointing to the headnote instead of the decision.
Judges, seeing that citation in the official United States Reports, assumed it was accurate and, within a decade, began to rely on it. Soon, other cases were citing Santa Clara as having finally and firmly established that corporations are persons under the Fourteenth Amendment and entitled to the rights previously enjoyed only by humans.
Nobody, it appears, bothered to check the actual decision. Why would they? After all, it was right there in the official record, summarized by the Supreme Court’s own official reporter, a wealthy and powerful man with a well-known reputation who was the son of the Massachusetts governor.
In 1889, just three years after Santa Clara, corporate lawyers first successfully established that damnable headnote as precedent. In Minneapolis & St. Louis Railway Co. v. Beckwith, the Supreme Court cited Santa Clara, claiming in an actual decision that corporations are persons under the Fourteenth Amendment.
With that case, now in an actual decision by the Court itself and not just a statement by the Court’s reporter, the lie became the law.
And today, much to the detriment of both democracy and America’s working class, 137 years later, it still is.
What Was Lost
The fraud of 1886 didn’t just corrupt constitutional law. It altered the entire course of American history.
The Progressive Era still happened, and the labor movement still won important victories. The income tax was established. Antitrust laws were passed. Women won the right to vote. The First Progressive Era, from the 1890s through 1920, identified crucial reforms, most of which just made America’s oligarchs even more determined to fight back.
And when the Republican Great Depression showed what unrestrained corporate power really meant—banks failing, families starving, millions homeless—Franklin Roosevelt reinvented American politics and economics to create the Second Progressive Era, what he called the New Deal. It included Social Security, the right to organize unions, regulations that prevented banks from gambling with depositors’ money, and a tax system that required the wealthy to pay their fair share.
By 1981 when Reagan was sworn into office, the American Dream was real for fully two-thirds of Americans. A single income could support a family. You could buy a house for three times your annual salary. College was affordable or, in some states, even free. Healthcare didn’t bankrupt families. Retirement was secure. Children had better opportunities than their parents.
But throughout that entire period, Field’s and Davis’s doctrine of corporate constitutional rights remained embedded in constitutional law like a dormant virus or an unexploded landmine. The oligarchs had lost battle after battle during the Progressive Eras, but they succeeded in hanging onto their ultimate weapon: the fraudulent claim that corporations had constitutional rights.
When Ronald Reagan’s “conservative (neoliberal oligarchic) revolution” began in 1981, that weapon was activated. Corporate constitutional rights became the battering ram that destroyed the American Dream, piece by piece, decade by decade, until we arrived at today, when Millennials own just 4.6 percent of the nation’s wealth compared to the 21.3 percent Boomers owned at the same age, and our president is openly dancing to the tunes of major polluters and fossil fuel corporations in exchange for campaign contributions and gifts.
The railroad oligarchs and their shills of 1886, J.C. Bancroft Davis and Stephen J. Field, planted a bomb in the Constitution. It took five generations to fully detonate it, but when the oligarchs of the 1970s and 1980s finally did, it laid waste to almost everything the Progressive Eras had built.
Understanding how that bomb was planted—and who planted it—is critical to knowing how to defuse it.
That’s what brings us to the triggerman: J.C. Bancroft Davis.
The Crime Scene
How Corporations Stole Human Rights in 1886
THE CASE
Santa Clara County v. Southern Pacific Railroad Company,
US Supreme Court, 1886
Actual issue: A county sued a railroad over $30,000 in unpaid property taxes.
THE CONSPIRATORS
THE TRIGGERMAN: J.C. Bancroft Davis, Supreme Court Reporter
Former railroad president • Railroad stock owner
His crime: Wrote a fraudulent summary claiming the Court ruled corporations are “persons”
THE MASTERMIND: Justice Stephen J. Field, Supreme Court Justice
Railroad stock owner • Friend of railroad oligarchs
His goal: Corporate constitutional rights through decades of failed court cases
THE FRAUD:
WHAT DAVIS WROTE: The Headnote: “The defendant Corporations are persons within the intent of the Fourteenth Amendment . . . ”
THIS IS NOT LAW: Headnotes are summaries with no legal standing.
WHAT THE COURT ACTUALLY RULED: “It is not necessary to consider” whether the Fourteenth Amendment applies to corporations.
THE COURT REFUSED TO DECIDE: They ruled only on a technicality about fence taxes.
THE RESULT: For 140 years, courts cited Davis’s fraudulent headnote as if it were law.
One lie became the foundation for
Citizens United: corporate “free speech” to buy elections
Hobby Lobby: corporate “religious freedom”
Corporate “privacy” to hide pollution and crimes
Corporate “due process” to block regulations
The Supreme Court never ruled that corporations are people.
A court reporter made it up.
Source: Santa Clara County v. Southern Pacific Railroad Company, 118 US 394 (1886)
