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Taking Care of Business: Citizenship and the Charter of Incorporation
by Richard L. Grossman and Frank T. Adams
Preface
Corporations cause harm every day. Why do their harms go unchecked? How can they dictate what we produce, how we work, what we eat, drink and breathe? How did a self-governing people let this come to pass?
Corporations were not supposed to reign in the United States.
When we look at the history of our states, we learn that citizens intentionally defined corporations through charters -- the certificates of incorporation.
In exchange for the charter, a corporation was obligated to obey all laws, to serve the common good, and to cause no harm. Early state legislators wrote charter laws and actual charters to limit corporate authority, and to ensure that when a corporation caused harm, they could revoke its charter.
During the late 19th century, corporations subverted state governments, taking our power to put charters of incorporation to the uses originally intended.
Corporations may have taken our political power but they have not taken our Constitutional sovereignty. Citizens are guaranteed sovereign authority over government officeholders. Every state still has legal authority to grant and to revoke corporate charters. Corporations, large or small, still must obey all laws, serve the common good, and cause no harm.
To exercise our sovereign authority over corporations, we must take back our political authority over our state governments.
Claiming Our Legacy
Today, in our names, state legislators give charters to individuals who want to organize businesses. Our legislators are also supposed to oversee how every corporation behaves. Corporations cannot operate -- own property, borrow money, hire and fire, manufacture or trade, sign contracts, sell stock, sue and be sued, accumulate assets or debts -- without the continued permission of state officeholders.
Our right to charter corporations is as crucial to self-government as our right to vote. Both are basic franchises, essential tools of liberty.
At first only white men who owned property could vote, and gaining the vote for every person has taken years. But as we were winning that struggle, corporate promoters were taking away our right to have a democratic say in our economic lives.
Corporate owners claim special protections under the U.S. Constitution. They assert the legal authority over what to make and how to make it, to move money and mountains, to influence elections and to bend governments to their will.
They insist that once formed, corporations may operate forever. Corporate managers say they must enjoy limited liability, and be free from community or worker interference with business judgments.
The lord proprietors of England's colonial trading corporations said the same things, even boasting that their authority came not from a constitution, but from God. Since the colonists used guns to take land from the Indians, they could easily see the source of that corporate authority was the king's militia.
The colonists did not make a revolution over a tax on tea. They fought for many reasons, but chiefly to create a nation where citizens were the government and ruled corporations.
So even as Americans were routing the king's armies, they vowed to put corporations under democratic command. As one revolutionary, Thomas Allen, said:
A Hostile Takeover
The U.S. Constitution makes no mention of corporations. Yet the history of constitutional law is, as former Supreme Court Justice Felix Frankfurter said, "the history of the impact of the modern corporation upon the American scene."
Today's business corporation is an artificial creation, shielding owners and managers while preserving corporate privilege and existence. Artificial or not, corporations have won more rights under law than people have -- rights which government has protected with armed force.
Investment and production decisions that shape our communities and rule our lives are made in boardrooms, regulatory agencies, and courtrooms. Judges and legislators have made it possible for business to keep decisions about money, production, work and ownership beyond the reach of democracy. They have created a corporate system under law.
This is not what many early Americans had in mind.
People were determined to keep investment and production decisions local and democratic. They believed corporations were neither inevitable nor always appropriate. Our history is filled with successful worker-owned enterprises, cooperatives and neighborhood shops, efficient businesses owned by cities and towns. For a long time, even chartered corporations functioned well under sovereign citizen control.
But while they were weakening charter laws, corporate leaders also were manipulating the legal system to take our property rights. "Corporations confronted the law at every point. They hired lawyers and created whole law firms," according to law professor Lawrence M. Friedman. "They bought and sold governments."
In law, property is not merely a piece of land, a house, a bicycle. Property is a bundle of rights; property law determines who uses those rights. As legal scholar Morris Raphael Cohen said, property is "what each of us shall receive from our work, and from the natural resources of the earth . . . the ownership of land and machinery, with the rights of drawing rent, interest, etc., [which] determine the future distribution of the goods . . ."
Under pressure from industrialists and bankers, a handful of 19th century judges gave corporations more rights in property than human beings enjoyed in their persons. Reverend Reverdy Ransom, himself once a slave treated as property, was among the many to object, declaring "that the rights of men are more sacred than the rights of property."
Undeterred by such common sense, judges redefined corporate profits as property. Corporations got courts to assume that huge, wealthy corporations competed on equal terms with neighborhood businesses or with individuals. The courts declared corporate contracts, and the rate of return on investment, were property that could not be meddled with by citizens or by their elected representatives.
Within a few decades, judges redefined the common good to mean corporate use of humans and the earth for maximum production and profit. Workers, cities and towns, states and nature were left with fewer and fewer rights corporations were bound to respect.
Wielding property rights through laws backed by government became an effective, reliable strategy to build and to sustain corporate mastery.
by Richard L. Grossman and Frank T. Adams
| Contents | |
Neither the claims of ownership nor those of control can stand against the paramount interests of the community. It remains only for the claims of the community to be put forward with clarity and force.
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Preface
Corporations cause harm every day. Why do their harms go unchecked? How can they dictate what we produce, how we work, what we eat, drink and breathe? How did a self-governing people let this come to pass?
Corporations were not supposed to reign in the United States.
When we look at the history of our states, we learn that citizens intentionally defined corporations through charters -- the certificates of incorporation.
In exchange for the charter, a corporation was obligated to obey all laws, to serve the common good, and to cause no harm. Early state legislators wrote charter laws and actual charters to limit corporate authority, and to ensure that when a corporation caused harm, they could revoke its charter.
During the late 19th century, corporations subverted state governments, taking our power to put charters of incorporation to the uses originally intended.
Corporations may have taken our political power but they have not taken our Constitutional sovereignty. Citizens are guaranteed sovereign authority over government officeholders. Every state still has legal authority to grant and to revoke corporate charters. Corporations, large or small, still must obey all laws, serve the common good, and cause no harm.
To exercise our sovereign authority over corporations, we must take back our political authority over our state governments.
Claiming Our Legacy
Today, in our names, state legislators give charters to individuals who want to organize businesses. Our legislators are also supposed to oversee how every corporation behaves. Corporations cannot operate -- own property, borrow money, hire and fire, manufacture or trade, sign contracts, sell stock, sue and be sued, accumulate assets or debts -- without the continued permission of state officeholders.
Our right to charter corporations is as crucial to self-government as our right to vote. Both are basic franchises, essential tools of liberty.
At first only white men who owned property could vote, and gaining the vote for every person has taken years. But as we were winning that struggle, corporate promoters were taking away our right to have a democratic say in our economic lives.
Corporate owners claim special protections under the U.S. Constitution. They assert the legal authority over what to make and how to make it, to move money and mountains, to influence elections and to bend governments to their will.
They insist that once formed, corporations may operate forever. Corporate managers say they must enjoy limited liability, and be free from community or worker interference with business judgments.
The lord proprietors of England's colonial trading corporations said the same things, even boasting that their authority came not from a constitution, but from God. Since the colonists used guns to take land from the Indians, they could easily see the source of that corporate authority was the king's militia.
The colonists did not make a revolution over a tax on tea. They fought for many reasons, but chiefly to create a nation where citizens were the government and ruled corporations.
So even as Americans were routing the king's armies, they vowed to put corporations under democratic command. As one revolutionary, Thomas Allen, said:
It concerned the People to see to it that whilst we are fighting against oppression from the King and Parliament that we did not suffer it to rise up in our Bowels . . . [and to have] Usurpers rising up amongst ourselves.
The victors entrusted the chartering process to each state legislature. Legislators still have this public trust. A Hostile Takeover
The U.S. Constitution makes no mention of corporations. Yet the history of constitutional law is, as former Supreme Court Justice Felix Frankfurter said, "the history of the impact of the modern corporation upon the American scene."
Today's business corporation is an artificial creation, shielding owners and managers while preserving corporate privilege and existence. Artificial or not, corporations have won more rights under law than people have -- rights which government has protected with armed force.
Investment and production decisions that shape our communities and rule our lives are made in boardrooms, regulatory agencies, and courtrooms. Judges and legislators have made it possible for business to keep decisions about money, production, work and ownership beyond the reach of democracy. They have created a corporate system under law.
This is not what many early Americans had in mind.
People were determined to keep investment and production decisions local and democratic. They believed corporations were neither inevitable nor always appropriate. Our history is filled with successful worker-owned enterprises, cooperatives and neighborhood shops, efficient businesses owned by cities and towns. For a long time, even chartered corporations functioned well under sovereign citizen control.
But while they were weakening charter laws, corporate leaders also were manipulating the legal system to take our property rights. "Corporations confronted the law at every point. They hired lawyers and created whole law firms," according to law professor Lawrence M. Friedman. "They bought and sold governments."
In law, property is not merely a piece of land, a house, a bicycle. Property is a bundle of rights; property law determines who uses those rights. As legal scholar Morris Raphael Cohen said, property is "what each of us shall receive from our work, and from the natural resources of the earth . . . the ownership of land and machinery, with the rights of drawing rent, interest, etc., [which] determine the future distribution of the goods . . ."
Under pressure from industrialists and bankers, a handful of 19th century judges gave corporations more rights in property than human beings enjoyed in their persons. Reverend Reverdy Ransom, himself once a slave treated as property, was among the many to object, declaring "that the rights of men are more sacred than the rights of property."
Undeterred by such common sense, judges redefined corporate profits as property. Corporations got courts to assume that huge, wealthy corporations competed on equal terms with neighborhood businesses or with individuals. The courts declared corporate contracts, and the rate of return on investment, were property that could not be meddled with by citizens or by their elected representatives.
Within a few decades, judges redefined the common good to mean corporate use of humans and the earth for maximum production and profit. Workers, cities and towns, states and nature were left with fewer and fewer rights corporations were bound to respect.
Wielding property rights through laws backed by government became an effective, reliable strategy to build and to sustain corporate mastery.