Chapter 7: What the Founders Knew
Your weekly excerpt from one of my books. This week: "Who Killed the American Dream: The Greatest Political Crime Ever Told"
Chapter 7: What the Founders Knew
The colonists who fought the American Revolution and wrote our Constitution knew well who and what were the most dangerous enemies of democracy. It wasn’t just King George III; it was his British East India Company, the most powerful corporation in the world.
This is why the Constitution never mentions corporations and why our nation’s Founders would have been horrified by corporate constitutional rights. Instead of a nation ruled by oligarchs and their businesses, the Founders and Framers of the Constitution envisioned a nation of independent citizens, small farmers, entrepreneurs, and journeymen who owned the fruit of their labor and enjoyed a continually improving standard of living.
Although Hamilton’s vision was more industrial and Jefferson’s more agrarian, both saw a future for our nation, in their own ways, that we today call the American Dream.
The Supreme Court–created doctrine of corporate constitutional rights, however, is the opposite of our Founders’ vision. It now dominates America through economic, political, and legal mechanisms that allow a small, wealthy group of oligarchs to dominate the rest of us. Our Founders fought a revolution to stop—and, moving forward, prevent—exactly that.
The Founders’ Vision of Economic Freedom
The Founders didn’t just fight the Revolutionary War to seize political freedom from the British Crown as it says in most of the history books our kids read; they also wanted economic freedom from the East India Company. They wanted a nation where We the People made the decisions, rather than having them imposed on us by billionaire tech bros and giant corporations.
Thomas Jefferson explicitly wanted a nation of independent yeoman farmers, each owning enough land to support a family, with only a very few dependent on wages from a wealthy employer. This vision was small-d democratic to its core: citizens who owned their own means of livelihood couldn’t be controlled by employers or landlords. With the rights enumerated in the Bill of Rights, they could vote their consciences, speak their minds, and participate in self-governance as political equals.
Benjamin Franklin, who rose from a penniless apprentice to become one of the most successful businessmen in the colonies, embodied the promise that hard work and talent could lift anyone to prosperity, even in the early republic. His story was the original American Dream, long before that phrase even existed.
This vision of a new, free America required government to limit corporate power. If, like the East India Company, corporations could grow without limit, accumulate mind-boggling levels of wealth, and use that financial power to buy influence with politicians and thus government, they’d essentially recreate the very tyranny the Founders fought the Revolution to overthrow.
Franklin himself warned about what we today call oligarchy (aka rule by the morbidly rich). “Only a virtuous people are capable of freedom,” he wrote. “As nations become corrupt and vicious, they have more need of masters.”
Two centuries later, Franklin Roosevelt would echo his namesake Ben Franklin’s insight when he famously declared in 1936 that “necessitous men are not free men.” Both of these two men who transformed America understood that economic security was the necessary foundation of political freedom. And they both knew corporate and oligarchic control of our economy and our politics threatened to destroy both.
The Declaration’s Missing Word
The Founders weren’t just starry-eyed believers in democracy; they were also strategic. They framed the American Revolution as a fight for “natural rights” against monarchical tyranny, using a message that played very well in Enlightenment-era Europe (particularly in pre-revolutionary France), where they needed support.
Explicitly calling out the world’s most powerful corporation in the Declaration might have complicated things, so the Founders tried to make sure corporate power would never gain the same foothold in America as it had in Britain, India, and other places across the world that were groaning under the Company’s yoke.
The Constitution’s Silence
In addition to establishing the structure of our government, our Constitution also (following Montesquieu’s advice) divides power among three branches, and limits the authority of each branch.
But even with all that, the Constitution never mentions corporations. Not even once.
This was not an oversight. The Founders knew all about corporations; after all, they’d fought one to establish this nation. Which is why they deliberately chose not to give corporations constitutional status or any sorts of protection whatsoever.
James Madison, Alexander Hamilton, and others understood that corporations were useful tools for specific purposes: building a canal, establishing a bank, constructing roads and other essential infrastructure. But they were only tools to be regulated by We the People through our elected representatives, not autonomous entities with their own rights.
The Constitution grants Congress the power to regulate commerce. It gives states responsibility for chartering corporations. But it doesn’t grant corporations any rights whatsoever.
James Madison wrote to his mentor, Thomas Jefferson, on October 24, 1787 (just weeks after they’d finished writing the Constitution), about his concern for possible future corruption by “the representatives of Counties and Corporations in the Legislatures of the States much more disposed to sacrifice the aggregate interest, and even authority . . . over the interests of the nation.”
But, because the power to bring corporations into existence and regulate their behavior was left by the Constitution entirely to the states, he didn’t believe America would ever again have to confront a giant monopoly like the East India Company.
“Many illustrations might be given of this impossibility,” he wrote. “How long has it taken to fix, and how imperfectly is yet fixed, the legislative power of corporations, though that power is subordinate in the most compleat manner? The line of distinction between the power of regulating trade and that of drawing revenue from it, which was once considered the barrier of our liberties [by the King and the Company], was found on fair discussion, to be absolutely undefinable.”
When the Bill of Rights was added to the Constitution in 1791, it explicitly protected human rights: speech, religion, assembly, due process, and trial by jury. These were what the Founders considered “natural rights” given to us by what the Declaration of Independence calls “Nature’s God” to human beings, not artificial privileges for legal fictions called corporations.
The Founders would have ridiculed—or been horrified by—the idea that a corporation, a piece of paper, a legal abstraction, could ever achieve the same rights as human beings.
Jefferson’s Warning
Thomas Jefferson never stopped worrying about corporate power. In letter after letter, he warned about the danger of “moneyed corporations” becoming a new aristocracy.
In 1816, Jefferson wrote: “I hope we shall crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.”
Jefferson saw it coming, though, during the 1820s, after his presidency, as the country experienced explosive growth and the first steam-powered railroads emerged. Banks, manufacturing corporations, southern plantations, and the New York trading companies were accumulating dangerous levels of power. They were buying politicians, manipulating markets, and acting as if they were above democratic control.
Jefferson’s solution was strict regulation and charter revocation for corporations that violated the public interest. Like every other one of the Founders, he never once suggested corporations should have the constitutional rights he and his peers had put their lives on the line for; that would have seemed insane to him.
Jefferson and his peers understood something that over a century of corporate constitutional rights has caused us to forget: corporations exist solely at the pleasure of the people acting through state governments. We create them. We can constrain them. We can destroy them. They have no inherent right to exist, just the privileges that we grant them.
Madison’s Insights
James Madison, who drafted much of the Constitution, also understood the danger of concentrated economic power, particularly when it was combined with political influence.
In Federalist No. 10, Madison warned about “factions,” groups he defined as having interests “adversed to the rights of other citizens, or to the permanent and aggregate interests of the community.” He and his colleagues in the Convention of 1787 designed the Constitution’s checks and balances explicitly to prevent any single faction from dominating our government.
But Madison could barely have imagined corporations as large as modern multinationals. The biggest corporations in 1788 America were tiny compared to the British East India Company, which Madison and the others had seen as a dangerous aberration worth fighting a war against, not a model for the future of their new republic.
Madison’s design of the Constitution assumed that economic power would be relatively dispersed and that governments would control corporations, not the other way around.
Corporate constitutional rights, established in the late 1880s, however, reversed this. Instead of government controlling corporations, a corrupt Supreme Court justice and his court reporter henchman gave corporations the constitutional weapons they’d eventually use to fight virtually any semblance of government control.
The Early State Experience
The first American states took seriously their power to control corporations. In the early republic, state legislatures granted corporate charters sparingly and with extraordinarily strict conditions. Corporate charters were required to specify the purpose of the corporation, and it couldn’t do anything else. They specified how long the corporation could exist, typically twenty to thirty years (none were established in perpetuity). They defined how much capital a company could control, where it could operate, what it could own, who could serve as directors, and what reports it had to file.
Throughout the nineteenth century, state legislatures regularly revoked charters of corporations that violated their terms or acted against the public interest. The corporate death sentence was a real possibility and was frequently invoked.
In the minds of these early politicians, this wasn’t anti-business: it was a new American democracy controlling its own artificial-person creations.
Pennsylvania, Ohio, and other states revoked dozens of corporate charters in the 1800s for various offenses: failure to serve the public interest, corruption, violation of charter terms, or simply because the legislature decided the corporation was no longer needed.
Corporations were simply viewed as tools of commerce, and when a tool broke or became dangerous, you threw it away.
What Changed
Two things destroyed this system of state-level democratic corporate control.
First, after the Civil War, states began competing for the revenue that could be had from corporate charter fees, employment, and taxes on business activities. In response to a challenge to Ohio’s corporate antitrust laws by John D. Rockefeller’s Standard Oil Trust, New Jersey pioneered “charter mongering,” offering weak regulations and low taxes to attract corporate charters. Other states followed (including Delaware, where more than half of American corporations are today chartered), and a race to the bottom began during what’s today referred to as the “Chartermongering Era.”
Second, the adoption of the Santa Clara headnote by the Supreme Court in the 1890s gave corporations constitutional rights that made state control much harder. Once corporations could claim due process, equal protection, privacy, free speech, and other constitutional rights, revoking charters became legally complex and, with the largest corporations, extraordinarily expensive.
The combination proved deadly to democracy. Weak state regulations plus corporate constitutional rights brought late nineteenth-century America corporate power and the rise of dynastic wealth, all without democratic accountability.
The Founders had designed a system to prevent exactly this outcome, but Davis’s and Field’s corporate constitutional rights destroyed it.
From the Founders to FDR
The Founders’ vision of economic freedom, of citizens owning their own labor and controlling their own destinies, didn’t die with corporate constitutional rights in the 1890s. It went underground, waiting for the right moment to reemerge.
That moment came in 1933, when President Franklin D. Roosevelt took office in the depths of the Republican Great Depression.
FDR understood what the Founders both knew and proclaimed: that economic security is the foundation of political freedom. “Necessitous men are not free men,” he repeatedly declared. People who are hungry, out of a job, or who can’t afford a doctor or a home, are not truly free, he said, no matter what rights the Constitution guarantees them on paper.
Roosevelt built on the Founders’ vision to create the American Dream in its modern form with a massive collection of nation-changing laws and government agencies he called The New Deal. They included the right to a job that paid a living wage, the right to organize and bargain collectively, the right to a secure retirement, and the right to access a basic social safety net that kept job losses or natural disasters from destroying families.
By 1981, that vision had become reality for two-thirds of American families. A single income could support a family, and you could buy a house for three times your annual salary. College was affordable, even with a part-time job (as I experienced). Healthcare didn’t bankrupt people, and, with Social Security and Medicare, retirement was finally secure.
Most of the Founders would have lauded this new America that FDR brought about and LBJ fine-tuned. Over loud Republican objections to the right to unionize, the minimum wage, Social Security, and pretty much every other New Deal and Great Society program, we finally became the nation of independent, economically secure citizens they’d envisioned, updated for the industrial age.
But corporate constitutional rights remained embedded in the law, a time bomb planted in 1886. Thus, when Ronald Reagan activated it in 1981, the American Dream began to die.
Recovering the Founders’ Vision
The Founders got it right: Corporations can be useful tools, but they must be controlled by democratic governance for the benefit of society as well as their wealthy owners. They’d have no inherent rights, only granted privileges. And when they abused those privileges, they’d be constrained or even destroyed.
The doctrine of corporate constitutional rights Davis and Field kicked off in 1886 turned this vision upside down, giving corporations constitutional weapons first designed exclusively for humans that they could use to fight back efforts at democratic control. It transformed them from servants of the public into our modern-day masters.
Undoing corporate constitutional rights means recovering the Founders’ vision, returning corporations to their proper place as tools of society, not rulers of society. It means restoring the economic freedom and affordability that makes political freedom possible.
It means, in short, rebuilding the American Dream.
But before we can rebuild our nation and our middle class, we first must understand how completely corporate constitutional rights have corrupted our democracy. The story of that corruption reached its climax in 2010, with the Supreme Court’s unscrupulous decision by five on-the-take Republicans on the Court in Citizens United. That decision, more than any others, shows us what happens when the fraud of 1886 is taken to its logical conclusion.
Ben Franklin said, "We gave you a Republic, if you can keep it".
A Republic is a society ruled by wise men. A democratic Republic is a society ruled by elected wise men. Athens and pre Caesarian Rome were Republics, and the "wise men" were Senators, chosen from among those "wise" enough to acquire substantial property, and enough to buy votes
In the first election of December 15, 1788, to January 7, 1789. any property owner, including blacks and women could vote. In reality, property owning blacks did vote in Pennyslvania and New Jersey, and women in N.J.
In 1792 New Hampshire was the first to enfranchise all men, by dropping the property owning requirement, other states soon followed,.In 1807 N.J. passed a law disenfranchising all blacks and women.
The problem today is the same as then. Money rules
We live in a country that would sooner grant human status to a corporation than to a person of color, or to a woman. When, in fact, we have declared such humans to have "equal protection under the law", that right is swiftly co-opted by corporate lawyers and jurists. I think it was a mistake to not mention corporations in the Constitution, to limit their power, and to define rights as pertaining only to flesh-and-blood humans. Given the slightest shadow of equivocation, corporate legal teams will wear away the original intent until there is nothing left of it.