Sunday Book Excerpt: Unequal Protection: How Corporations Became "People"...

The amazing story of how a lie told by a politically ambitious Supreme Court clerk in 1886 altered the course of American history and paved the way for the modern corporate takeover of US politics

Unequal Protection: How Corporations Became “People” and How You Can Fight Back

The first thing to understand is the difference between the natural person and the fictitious person called a corporation. They differ in the purpose for which they are created, in the strength which they possess, and in the restraints under which they act.

Man is the handiwork of God and was placed upon earth to carry out a Divine purpose; the corporation is the handiwork of man and created to carry out a money-making policy.

There is comparatively little difference in the strength of men; a corporation may be one hundred, one thousand, or even one million times stronger than the average man. Man acts under the restraints of conscience, and is influenced also by a belief in a future life. A corporation has no soul and cares nothing about the hereafter....

—William Jennings Bryan, in his address to the Ohio 1912 Constitutional Convention

Chapter 1: The Deciding Moment?

Part of the American Revolution was about to be lost a century after it had been fought. At the time probably very few of the people involved realized that what they were about to witness could be a counterrevolution that would change life in the United States and, ultimately, the world over the course of the following century.

In 1886 the Supreme Court met in the U.S. Capitol building, in what is now called the Old Senate Chamber. It was May, and while the northeastern states were slowly recovering from the most devastating ice storm of the century just three months earlier, Washington, D.C., was warm and in bloom.

In the Supreme Court’s chamber, a gilt eagle stretched its 6-foot wingspan over the head of Chief Justice Morrison Remick Waite as he glared down at the attorneys for the Southern Pacific Railroad and the county of Santa Clara, California. Waite was about to pronounce judgment in a case that had been argued over a year earlier, at the end of January 1885.

The chief justice had a square head with a wide slash of a mouth over a broomlike shock of bristly graying beard that shot out in every direction. A graduate of Yale University and formerly a lawyer out of Toledo, Ohio, Waite had specialized in defending railroads and large corporations.

In 1846 Waite had run for Congress as a Whig from Ohio but lost before being elected as a state representative in 1849. After serving a single term, he had gone back to litigation on behalf of the biggest and wealthiest clients he could find, this time joining the Geneva Arbitration case suing the British government for helping outfit the Confederate Army with the warship Alabama. He and his delegation won an astounding $15.5 million (close to $200 billion in today’s dollars) for the United States in 1871, bringing him national attention in what was often referred to as the Alabama Claims case.

In 1874, when Supreme Court Chief Justice Salmon P. Chase died, President Ulysses S. Grant had real trouble selecting a replacement, in part because his administration was embroiled in a railroad bribery scandal. His first two choices withdrew, his third was so patently political that it was certain to be rejected by the Senate, and three others similarly failed to pass muster. On his seventh try, Grant nominated attorney Waite.

Waite had never before been a judge in any court, but he passed Senate confirmation, instantly becoming the most powerful judge in the most powerful court in the land. It was a position and a power he relished and promoted, even turning down the 1876 Republican nomination for president to stay on the Court and to serve as a member of the Yale [University] Corporation.

Standing before Waite and the other justices of the Supreme Court that spring day were three attorneys each for the railroad and the county.

The chief legal adviser for the Southern Pacific Railroad was S. W. Sanderson, a former judge. He was a huge, aristocratic bear of a man, more than 6 feet tall, with neatly combed gray hair and an elegantly trimmed white goatee. For more than two decades, Sanderson had made himself rich, litigating for the nation’s largest railroads. Artist Thomas Hill included a portentous and dignified Sanderson in his famous painting The Last Spike about the 1869 transcontinental meeting of the rail lines of the Union Pacific and Central Pacific railroads at Promontory Summit, Utah.

The lead lawyer for Santa Clara County was Delphin M. Delmas, a Democrat who later went into politics and by 1904 was known as “the Silver-tongued Orator of the West” when he was elected a delegate from California to the Democratic National Convention. Whereas Waite and Sanderson had spent their lives serving the richest men in America, Delmas had always worked on behalf of local California governments and, later, as a criminal defense attorney. For example, he passionately and single-handedly argued pro bono before the California legislature for the law that protected the nation’s last remaining redwood forests.

Fiercely defensive about “the rights of natural persons,” Delmas was a fastidious, unimposing man, known to wear “a frock coat, gray-striped trousers, a wing collar and an Ascot tie,” whose “voice thrummed with emotion,” and he was nationally known as the master dramatist of America’s courtrooms. He had a substantial nose and a broad forehead only slightly covered in its center with a wispy bit of thinning hair. In the courtroom he was a brilliant lawyer, as the nation would learn in 1908 when he successfully defended Harry K. Thaw for murder in what was the most sensational case of the first half of the century, later made into the 1955 movie The Girl in the Red Velvet Swing, starring Ray Milland and Joan Collins (Delmas was played by Luther Adler).

The case about to be decided in the Old Senate Chamber before Justice Waite’s Supreme Court was about the way Santa Clara County had been taxing the land and rights-of-way owned by the Southern Pacific Railroad. Claiming the taxation was improper, the railroad had refused for six years to pay any taxes levied by Santa Clara County, and the case had ended up before the Supreme Court, with Delmas and Sanderson making the main arguments.

Although the case on its face was a simple tax matter, having nothing to do with due process or human rights or corporate personhood, the attorneys for the railroad nonetheless used much of their argument time to press the issue that the railroad corporation was, in fact, a “person” and should be entitled to the same right of equal protection under the law that was granted to former slaves by the Fourteenth Amendment.

The Mystery of 1886 and Chief Justice Waite

In the decade leading up to this May day in 1886, the railroads had lost every Supreme Court case that they had brought seeking Fourteenth Amendment rights. I’ve searched dozens of histories of the time, representing a wide variety of viewpoints and opinions, but only two have made a serious attempt to answer the question of what happened that fateful day—and their theories clash.

No laws were passed by Congress granting corporations the same treatment under the Constitution as living, breathing human beings, and none has been passed since then. It was not a concept drawn from older English law. No court decisions, state or federal, held that corporations were or should be considered the same as natural persons instead of artificial persons. The Supreme Court did not rule, in this or any other case, on the issue of corporate personhood.

In fact, to this day there has been no Supreme Court ruling that explicitly explains why a corporation—with its ability to continue operating forever, its being merely a legal agreement that can’t be put in jail and doesn’t need fresh water to drink or clean air to breathe—should be granted the same constitutional rights our Founders fought for, died for, and granted to the very mortal human beings who are citizens of the United States, to protect them against the perils of imprisonment and suppression they had experienced under a despot king.

But something happened in 1886, even though nobody to this day knows exactly what or why.

That year Sanderson decided to again defy a government agency that was trying to regulate his railroad’s activity. This time he went after Santa Clara County, California. His claim, in part, was that because a railroad corporation was a “person” under the Constitution, local governments couldn’t discriminate against it by having different laws and taxes in different places. It was a variation on the Fourteenth Amendment argument made by civil rights advocates in the 1960s that if a White man could sit at a Woolworth’s lunch counter, a Black man should receive the same privilege. In 1885 the case came before the Supreme Court.

In arguments before the Court in January 1885, Sanderson asserted that corporate persons should be treated the same as natural (or human) persons. He said, “I believe that the clause [of the Fourteenth Amendment] in relation to equal protection means the same thing as the plain and simple yet sublime words found in our Declaration of Independence, ‘all men are created equal.’ Not equal in physical or mental power, not equal in fortune or social position, but equal before the law.”1

Sanderson’s fellow lawyer for the railroads, George F. Edmunds, added his opinion that the Fourteenth Amendment leveled the field between artificial persons (corporations) and natural persons (humans) by a “broad and catholic provision for universal security, resting upon citizenship as it regarded political rights, and resting upon humanity as it regarded private rights.”

But that wasn’t actually what the case was about—that was just a minor point. The county was suing the railroad for back taxes, and the railroad refused to pay, claiming six different defenses. The specifics are not important because the central concern is whether the Court ruled on the Fourteenth Amendment issue. As will be shown below, the Supreme Court’s decision clearly says it did not. But to put the railroad’s complaint in perspective, consider this:

• On property with a $30 million mortgage, the railroad was refusing to pay taxes of about $30,000. (That’s like having a $10,000 car and refusing to pay a $10 tax on it—and taking the case to the Supreme Court.)

• One of the railroad’s defenses was that when the state assessed the value of the railroad’s property, it accidentally included the value of the fences along the right-of-way. The county, not the state, should have assessed the fences, so the tax being paid in Santa Clara County was different—unequal—from the tax paid in other counties that did their own assessment instead of using the state’s. To make their point (and to make the case a bigger deal), the railroad withheld all its taxes from the county.

All the tax was still due to Santa Clara County; the railroad didn’t dispute that. But it said that the wrong assessor assessed the fences—a tiny fraction of the whole amount—so it refused to pay any of the tax and fought it all the way to the U.S. Supreme Court.

And as it happens, the Supreme Court of the United States agreed: “the entire assessment is a nullity, upon the ground that the state board of equalization included...property [the fences] which it was without jurisdiction to assess for taxation...”

The Court rejected the county’s appeal, and that was the end of it. Except for one thing. One of the railroad’s six defenses involved the Fourteenth Amendment. As it happens, because the case was decided based on the fence issue, the railroad didn’t need those extra defenses, and the Court never ruled or commented in its ultimate decision on any of them. But one of them—related to the Fourteenth Amendment—still crept into the written record, even though the Court specifically did not rule on it.

Here’s how the matter unfolded. First, the railroad’s defense.

The Treatment That the Railroad Claimed Was Unfair

In the Fourteenth Amendment part of its defense, the railroad said:

That the provisions of the constitution and laws of California...are in violation of the Fourteenth Amendment of the Constitution, in so far as they require the assessment of their property at its full money value, without making deduction, as in the case of railroads [that are only] operated in one county, and of other corporations [that operate in only one county], and of natural persons [who can physically reside in only one county], for the value of the mortgages... [Italics added.]

The italic portions say, in essence, “The state is taxing us in a different way from how it taxes other corporations and real live human beings. That’s not fair, and it violates our corporate right to equal protection that is the same as all other ‘persons’ under the tax laws.”

The implication, of course, is that the state has no right to decide that corporations get different tax rates than humans. And the railroad was using the former slaves’ equal protection clause (the Fourteenth Amendment) as its shield.

The Legal Difference between Artificial and Natural Persons

In the Supreme Court at that time, cases were typically decided a year after arguments are presented, allowing the justices time to research and prepare their written decisions. So it happened that on January 26, 1885 (a year before the 1886 decision was handed down), Delphin M. Delmas, the attorney for Santa Clara County, made his case before the Supreme Court. I searched for the better part of a year for copies of the arguments made in the case—the Supreme Court kept no notes—and finally discovered, in an antiquarian book shop in San Francisco, a copy of Speeches and Addresses by D. M. Delmas. It was a hardbound collection of Delmas’s speeches and his Santa Clara County arguments before the Supreme Court, which he had personally paid to self-publish in 1901. It’s incredibly rare to have such a time-machine look back into the past, and—even more exciting—Delmas’s arguments were as brilliant and persuasive as any of the words that Erle Stanley Gardner ever put into the mouth of Perry Mason.

“The defendant claims [that the state’s taxation policy]...violates that portion of the Fourteenth Amendment which provides that no state shall deny to any person within its jurisdiction the equal protection of the laws,” Delmas said, standing before the assembled justices while reading from the notes he would later self-publish. He added that such an argument, “if tenable, would place the organic law of California in a position ridiculous to the extreme.”

Winding himself up into full-throated outrage, Delmas rebuked the railroad’s lawyers with a pure and honest fury:

The shield behind which [the Southern Pacific Railroad] attacks the Constitution and laws of California is the Fourteenth Amendment. It argues that the amendment guarantees to every person within the jurisdiction of the State the equal protection of the laws; that a corporation is a person; that, therefore, it must receive the same protection as that accorded to all other persons in like circumstances....

To my mind, the fallacy, if I may be permitted so to term it, of the argument lies in the assumption that corporations are entitled to be governed by the laws that are applicable to natural persons. That, it is said, results from the fact that corporations are [artificial] persons, and that the last clause of the Fourteenth Amendment refers to all persons without distinction.

This was the crux of the argument that the railroad had been putting forth and on which, in the Ninth Circuit Court in California, Judge Stephen J. Field had kept ruling. Because the Fourteenth Amendment says no “person” can be denied equal protection under the law, and corporations had been considered a type of person (albeit an artificial person) for several hundred years under British common law, the railroad was now trying to get that recognition under American constitutional law.

Delmas said: “The defendant has been at pains to show that corporations are persons, and that being such they are entitled to the protection of the Fourteenth Amendment....The question is, Does that amendment place corporations on a footing of equality with individuals?”

He then quoted from the bible of legal scholars—the book that the Framers of our Constitution had frequently cited and referenced in their deliberations in 1787 in Philadelphia—Sir William Blackstone’s 1765 Commentaries on the Laws of England: “Blackstone says, ‘Persons are divided by the law into either natural persons or artificial. Natural persons are such as the God of nature formed us; artificial are such as are created and devised by human laws for the purposes of society and government, which are called corporations or bodies politic.’”

Delmas then moved from quoting the core authority on law to pleading common sense. If a corporation was a “person” legally, why couldn’t it make out a will or get married, for example?

This definition suggests at once that it would seem unnecessary to dwell upon, that though a corporation is a person, it is not the same kind of person as a human being, and need not of necessity—nay, in the very nature of things, cannot—enjoy all the rights of such or be governed by the same laws. When the law says, “Any person being of sound mind and of the age of discretion may make a will,” or “any person having arrived at the age of majority may marry,” I presume the most ardent advocate of equality of protection would hardly contend that corporations must enjoy the right of testamentary disposition or of contracting matrimony.

It’s about real human people, Delmas said. Any idiot who looked at the history or purpose of the Fourteenth Amendment could figure that out: “The whole history of the Fourteenth Amendment demonstrates beyond dispute that its whole scope and object was to establish equality between men—an attainable result—and not to establish equality between natural and artificial beings—an impossible result.”

As a good liberal California Democrat (as distinct from the southern Democrats), Delmas was furious. He’d spent much of his life fighting for the little guy, agreed strongly with the Radical Republicans (who had mostly become Democrats a decade earlier) about civil rights, and knew—as did anybody who read the newspapers of that era—the history of the Fourteenth Amendment.

The railroad lawyer Sanderson had before made a claim that a “secret committee” of Congress that helped write the Fourteenth Amendment had meant for it to equalize corporate persons and human persons. Delmas, if his performance before the Supreme Court was consistent with his later well-documented performances in criminal courtrooms, would have been trembling in righteous indignation as he said that the Fourteenth Amendment “is as broad as humanity itself”:

Wherever man is found within the confines of this Union, whatever his race, religion, or color, be he Caucasian, African, or Mongolian, be he Christian, infidel, or idolater, be he white, black, or copper-colored, he may take shelter under this great law as under a shield against individual oppression in any form, individual injustice in any shape. It is a protection to all men because they are men, members of the same great family, children of the same omnipotent Creator.

In its comprehensive words I find written by the hand of a nation of sixty millions in the firmament of imperishable law the sentiment uttered more than a hundred years ago by the philosopher of Geneva, and re-echoed in this country by the authors of the Declaration of the Thirteen Colonies: Proclaim to the world the equality of man.

Speaking of the “object of the Fourteenth Amendment,” Delmas said it straight out:

Its mission was to raise the humble, the down-trodden, and the oppressed to the level of the most exalted upon the broad plain of humanity—to make man the equal of man; but not to make the creature of the State—the bodiless, soulless, and mystic creature called a corporation—the equal of the creature of God....

Therefore, I venture to repeat that the Fourteenth Amendment does not command equality between human beings and corporations...

In closing his argument, Delmas had to add a punctuation mark. This could be, he suggested, one of the most important Supreme Court cases in the history of the United States because if corporations were given the powerful cudgel of human rights secured by the Bill of Rights, their ability to amass wealth and power could lead to death, war, and the impoverishment of actual human beings on a massive scale.

“I have now done,” he said. “Yet I cannot but think that the controversy now debated before your Honors is one of no ordinary importance.”

A year and five months passed while the Supreme Court debated the issues in private. And then came the afternoon of May 10, 1886, the fateful moment for the fateful words of the Court, upon which hung much of the future of the United States and, later, much of the world.

Chief Justice Waite Rewrites the Constitution (or Does He?)

According to the record left to us, here’s what seems to have happened. For reasons that were never recorded, moments before the Supreme Court was to render its decision in the now-infamous Santa Clara County v. Southern Pacific Railroad case, Chief Justice Waite turned his attention to Delmas and the other attorneys present.

As railroad attorney Sanderson and his two colleagues watched, Waite told Delmas and his two colleagues, “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 of the opinion that it does.” He then turned to Justice John M. Harlan, who delivered the Court’s opinion.

In the written record of the case, the court reporter noted, “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.”

This written statement, that corporations were persons rather than artificial persons, with an equal footing under the Bill of Rights as humans, was not a formal ruling of the court but was reportedly a simple statement by its chief justice, recorded by the court reporter.

There was no Supreme Court decision to the effect that corporations are equal to natural persons and not artificial persons. There were no opinions issued to that effect and therefore no dissenting opinions on this immensely important constitutional issue.

The written record, as excerpted above, simply assumed corporate personhood without any explanation why. The only explanation provided was the court reporter’s reference to something he says Waite said, which essentially says, “that’s just our opinion” without providing legal argument.

In these two sentences (according to the conventional wisdom), Waite weakened the kind of democratic republic the original authors of the Constitution had envisioned, and he set the stage for the future worldwide damage of our environmental, governmental, and cultural commons. The plutocracy that had arisen with the East India Company in 1600 and had been fought back by America’s Founders had gained a tool that was to allow it, in the coming decades, to once again gain control of most of North America and then the world.

Ironically, of the 307 Fourteenth Amendment cases brought before the Supreme Court in the years between Waite’s proclamation and 1910, only 19 dealt with African Americans: 288 were suits brought by corporations seeking the rights of natural persons.

Supreme Court Justice Hugo Black pointed out fifty years later, “I do not believe the word ‘person’ in the Fourteenth Amendment includes corporations....Neither the history nor the language of the Fourteenth Amendment justifies the belief that corporations are included within its protection.”4

Sixty years later Supreme Court Justice William O. Douglas made the same point, writing, “There was no history, logic or reason given to support that view [that corporations are legally ‘persons’].”

There was no change in legislation, and then-president Grover Cleveland had not issued a proclamation that corporations should be considered the same as natural persons. To the contrary President Cleveland, the only Democrat to serve as president during the Robber Baron Era, in his December 3, 1888, State of the Union address, said,

The gulf between employers and the employed is constantly widening, and classes are rapidly forming, one comprising the very rich and powerful, while in another are found the toiling poor. As we view the achievements of aggregated capital, we discover the existence of trusts, combinations, and monopolies, while the citizen is struggling far in the rear or is trampled to death beneath an iron heel. Corporations, which should be the carefully restrained creatures of the law and the servants of the people, are fast becoming the people’s masters.

The U.S. Constitution does not even contain the word corporation and has never been amended to contain it because the Founders wanted corporations to be regulated as close to home as possible, by the states, so they could be kept on a short leash—presumably so nothing like the East India Company would ever again arise to threaten the entrepreneurs of America.

But as a result of this case, for the past one hundred–plus years corporate lawyers and politicians have claimed that Chief Justice Waite turned the law on its side and reinvented America’s social hierarchy.

“But wait a minute,” many legal scholars have said over the years.