The Birth of Corporate Personhood

ED: We’ve heard a lot of debate these past few years about whether or not corporations should be granted the same legal rights as people. And while it certainly seems to generate a lot of heat today, the debate actually dates all the way back to the middle of the 19th century. It was then that the Supreme Court established that corporations are covered by the 14th Amendment. Now that amendment says the states cannot “deprive any person of life, liberty and property without due process of the law.”

Now, the 14th Amendment was created after the Civil War to protect the rights of newly freed slaves. So how is it that this new amendment to protect slaves came to be applied to corporations? Well, it actually happened fairly quickly. In 1873, five years after the 14th Amendment was ratified, a case made its way to the Supreme Court. And that case involved a group of incorporated butchers in New Orleans. The State of Louisiana wanted to relocate the butchers farther down the Mississippi River so that the blood and guts from their slaughter houses didn’t contaminate the city’s water supply.

BRIAN: But the lawyer on the other side invoked the 14th Amendment. He said that amendment clearly protect to the butchers from state interference. Four justices agreed. And they signed their name to a minority opinion stating as much. But their argument did not carry the day.

JACK BEATTY: The justice in the majority opinion, Justice Miller, said– “This has no foundation in the lineaments of the intent of the people that wrote the 14th Amendment. This is cockeyed!”

BRIAN: You might recognize that voice. Jack Beatty is the news analyst for NPR’s On Point, who’s also written extensively about money in American politics. In one of his books, he writes about how this new reading of the 14th Amendment went from minority opinion to the majority opinion.

The turning point came in 1885, with a Supreme Court case called Santa Clara vs. The Southern Pacific Railroads. That case dealt with a pretty mundane tax issue on the surface. But the precedent it established was huge. The decision extended the protection of the 14th Amendment to corporations. And yet, Beatty told me, that was never actually stated in the decision itself.

JACK BEATTY: It may be the only case in Supreme Court history or, not judge made law– we have a lot of that– but reporter made law.

BRIAN: Reporter made law? What do you mean by that?

JACK BEATTY: Well, in those days the court had a jurist, a lawyer, who reported on what happened in the cases, and who compiled the cases and published them for the benefit of the legal profession. And it was a highly prestigious job.

And the reporter, then, in this 1885 case, was a man named John Bancroft Davis, who was a former railroad president. And one of the things that the reporter did was he summarized the case. Before you read the case, you get a sort of summary of it in his head notes. Well, in his head note, Bancroft Davis flat and out says the corporation is considered a person under the 14th Amendment.

The note reads, “before argument, Mr. Justice White said, the court does not want to hear argument on the question whether the 14th Amendment forbids a state to deny any person within its jurisdiction equal protection of laws. Whether this applies to these corporations, we are all of the opinion that is does. These corporations being railroads.” That headnote– that defines the opinion.

BRIAN: Now Jack. Jack, are you saying that the reporter made this up? Or do you think the reporter genuinely was reporting what the justices were schmoozing about before they got into the opinion.

JACK BEATTY: This is a great debate. We don’t know. You know, what we have is some correspondence between the reporter, Bancroft Davis, and Chief Justice Waite, to whom Bancroft Davis sent that line saying– yes, we’ve agreed on this. And Waite wrote back– “I think your memorandum in the California railroad tax cases expresses with sufficient accuracy what was said before the argument began.” But he goes on to say, “I leave it with you to determine whether anything need be said about it in the report, inasmuch as we avoided meeting the constitutional question in the decision.”

BRIAN: All right, so this is fascinating. But one of the great things about history is we can see how all of this was received in retrospect. Couldn’t we really assess whether the Supreme Court was serious about treating corporations as persons by looking at whether subsequent Supreme Court decisions cite this and really start to assume that corporations are people? Is that what happened?

JACK BEATTY: That is what happened. Sure enough, this was, within a couple years, 1888, in a case called Pembina Mining, this was referred to as a precedent. The judge there writing the majority opinion says, “under the designation of person there is no doubt that a private corporation is included.”

That’s the first time that Santa Clara is cited as a precedent. And the judge who did that, Stephen J. Field, was all but a paid agent of the Southern Pacific Railroad. He was a California jurist. He was a friend of the principles of the railroad. He was a dogged defender of corporate privilege. And he was a man of lax judicial ethics. That is to say, his opinions, and there’s a lot of scholarship on this, show an almost willful effort to shape the law to accord with his policy preferences, his political preferences.

BRIAN: Now, now Jack. Jack, I know that the Supreme Court was not always the size it is today. But surely it consisted of more than one person.

JACK BEATTY: Oh yes.

BRIAN: So whatever Field’s predispositions may have been, and whatever his leanings, he did have to convince a majority of justices, didn’t he?

JACK BEATTY: Oh he did. He did. There’s no question about it. But those justices and their education really go to the nature of this Gilded Age. They were educated in the catechism of, you know– “state action is wrong. The state can do nothing right.”

BRIAN: OK, Jack, so it’s not just about railroad corruption. Field seems to have a real, well, a real sense of conviction here. But what’s behind this hatred of the state, as you call it. What’s behind Field’s conviction that corporations need this autonomy.

JACK BEATTY: I think he had in his mind the right of property. And as he looked across America, and first of all saw the revolution of the Civil War, which was, as a former Black Union soldier put it when he saw his former master, he said– “Masser, bottom rail top now!” This was right after the war, when people could believe that African Americans were bottom rail top.

And meanwhile, the other people at the bottom, labor, were stirring all over the country. And there were strikes. And there were– I mean, it was the age of, really, labor violence in America. And this terrified Field, partly out of personal reasons. His friends were these property owners. And the property they held, the railroad– Southern Pacific– was extraordinarily unpopular in California, where people were able to vote in anti-corporate legislators who wanted to go after them, and get their taxes from them, and regulate them. And, by God, Stephen Field called in the 14th Amendment to protect these bulwarks of order against these rabble-rousing assemblies.

BRIAN: Jack Beatty is the senior news analyst for NPR’s On Point. He writes about the beginning of corporate personhood in The Age of Betrayal: The Triumph of Money in America, 1865-1900.

It’s time for another break. But don’t go away. When we get back– why one of the biggest corporations in the world decided that smaller is better. You’re listening to BackStory. We’ll be back in a moment.