Over the last several years, two key Supreme Court decisions sparked widespread arguments over whether corporations should, for legal purposes, be considered people.
But the decisions in the Citizens United and Hobby Lobby cases have complicated the issues, which extend much farther back into U.S. history than the current political debate. Author Adam Winkler delves into that history in the new book “We the Corporations: How American Businesses Won Their Civil Rights.”
Winkler, a professor of law at UCLA, joins Chicago Tonight for a conversation.
Below, an excerpt of the book.
The following is excerpted from We the Corporations: How American Businesses Won Their Civil Rights by Adam Winkler. Copyright © 2018 by Adam Winkler. Used with permission of the publisher, Liveright Publishing Corporation, a division of W.W. Norton & Company, Inc. All rights reserved.
The First Corporate Rights Case
The Constitution of the United States went into effect in 1789, but it took nearly seventy years before the Supreme Court heard its first case explicitly addressing the constitutional rights of African Americans, Dred Scott v. Sandford, in 1857. The court in that case held that African Americans had “no rights which the white man was bound to respect.” The first women’s rights case, Bradwell v. Illinois, on whether women had a right to practice law, was not heard until 1873, and the Supreme Court ruled against the woman. Conversely, the first corporate rights case in the Supreme Court was decided decades earlier, in 1809, and the corporation won.
That 1809 case is one of the buried landmarks of American constitutional law, and the company behind it was the nation’s first great corporation, the Bank of the United States. The brainchild of Alexander Hamilton, the Bank was chartered by the first Congress in 1791 and carried the name of the new nation, yet was what Americans today would think of as a private business. It was a for- profit corporation with publicly traded stock, managed by executives who were accountable to stockholders. At a time when the handful of existing American corporations were local concerns— operating, say, a toll bridge across the Charles River— the Bank was the first truly national enterprise, with headquarters in Philadelphia and branches from Boston to New Orleans.1
Like so many of the giant corporations that feature in the history of the corporate rights movement— the Southern Pacific Railroad, Standard Oil, Philip Morris— the Bank of the United States provoked considerable controversy in its day. Opponents accused the Bank of having too much political and economic power. Today’s critics of Citizens United who worry about corporate corruption of American democracy would have found an ally in fiery Kentucky Whig Henry Clay, who complained of the Bank that “our liberties” were in the hands of “a body, who, in derogation of the great principle of all our institutions, responsibility to the people, is amenable only to a few stockholders.” When Georgia passed a law to limit the Bank’s influence in that state, the nation’s most powerful corporation simply refused to comply. The Bank’s civil disobedience led to the earliest Supreme Court case on whether corporations had constitutional protections, two centuries before Citizens United.2
The Supreme Court’s decision in Bank of the United States v. Deveauxhas been largely lost to modern memory. Although occasionally cited by courts, the case is not featured in modern constitutional law books or even in very many of the tomes on American legal history. Yet back in the first decade of the nineteenth century, the drama surrounding the case was well known. It pitted the legacies of two Founding Fathers, Alexander Hamilton and Thomas Jefferson, against each other. Their split over the Bank is already justly famous for giving birth to the two- party system. Less well known, however, is how their conflict spilled over into the struggle over constitutional protections for corporations. On this issue, Hamiltonians were corporationalists— proponents of corporate enterprise who advocated for expansive constitutional rights for business. Jeffersonians, meanwhile, were populists— opponents of corporate power who sought to limit corporate rights in the name of the people. The competing views of Hamiltonian corporationalists and Jeffersonian populists would set the terms of debate over constitutional protections for business for much of the next two centuries. Over the course of that history, the corporationalists would prove to be far more successful.
Another issue on which corporationalists and populists disagreed was corporate personhood. From the start, the Supreme Court has wrestled with whether corporations should be considered “people” under the Constitution and what exactly that might mean. Some critics of Citizens United argue that the reason corporations have constitutional rights today is that the Supreme Court has said that corporations are people. Indeed, one proposed response to Citizens United has been a constitutional amendment to clarify that corporations are not people under the language of the Constitution and do not have the rights of people. Yet, as we will see, corporate personhood has played only a small role in the expansion of constitutional rights to corporations. While the Supreme Court has said from time to time that corporations are people, the justices have more frequently offered other reasons to justify constitutional protections for corporations— often obscuring and hiding the corporate person rather than exalting it.
Beginning with Bank of the United States v. Deveaux, and for most of American history, corporate personhood has been deployed in precisely the opposite way from how today’s critics of Citizens Unitedimagine. Counterintutively, it has usually been populist opponents of corporations who have argued in favor of corporate personhood. For them, treating corporations as people was a way to limit the rights of corporations. And many of the most important Supreme Court decisions extending rights to corporations did not rely on corporate personhood at all. More commonly, the Supreme Court rejected the idea that a corporation was an independent, legal person with rights and duties all its own, and instead allowed the corporation to claim the rights of its members.
To understand the role of corporate personhood in American constitutional law requires a careful examination of the Bank of the United States case, which was the first Supreme Court case on the constitutional rights of corporations and laid the foundation for the many corporate rights cases to come. Oddly enough, the justices would preside over the case not in the usual Supreme Court courtroom but in a working pub, and the charismatic group of lawyers who participated in this mostly forgotten yet profoundly important case included a future president of the United States, a founder of Harvard’s Hasty Pudding social club, and a British Loyalist who fought against Independence in the Revolutionary War. They would argue over what might appear to be an esoteric issue: Did corporations have a constitutionally guaranteed right to sue in federal court? For the Bank, however, it was a matter of life or death. If forced to litigate the lawfulness of the Georgia tax in the Georgia courts, the Bank was sure to lose. For the nation, the case was even more significant. Bank of the United States v. Deveaux would graft onto the Constitution the first of many constitutional rights for corporations.