Corporate Personhood: 19th Century Invention and Contemporary Challenge

The OWS movement invites the question of what role should corporations play in American society.  With growing income inequality, corporate contributions to federal elections, and tax breaks so complicated that they require firms full of tax attorneys, we are not in an era where corporations are properly reigned in.  The question is when did corporations become like people in their rights and privileges?

Though the notion of a corporation as an artificial being predates the American Constitution, corporate rights as they are understood now began to develop in the 19^th century. The Framers left matters of corporate charters to state governments; state legislatures did not regularly begin to have corporate enabling statutes until around 1800.  This meant that not only were there a limited number of corporations in the United States and that the rights and privileges of corporations were closely policed by the states.  From the founding into the early 19^th century, American corporations grew from small, local enterprises to larger ventures.  These early corporations, in keeping with the earliest English church corporations, were legal devices for holding property and engaging in local trade or governance.  Critically, early American corporations were often oriented towards public works rather than private enterprise.

The notion of corporate personhood was first articulated in American law in 1819 with Justice Marshall’s opinion in Dartmouth College v. Woodward.   There, the state of New Hampshire sought to remove the private nature of Dartmouth College and make the institution public.  Dartmouth argued that the corporate charter originally granted from King George III to Dartmouth’s trustees was a contract and could not be voided by the state legislature.  The Court agreed and Marshall’s opinion specifically ruled that corporations had certain rights similar to an individual:

A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. Being the mere creature of law, it possesses only those properties which the charter of its creation confers upon it . . . . Among the most important are immortality, and, if the expression may be allowed, individuality . . . .

In 1886 the court further extended the rights of corporations in Santa Clara County v. Southern Pacific Railroad.  What began as an action over delinquent taxes resulted in the court finding that Equal Protection Clause of the  14^th Amendment applied to corporations as it would individuals.

It is doubtful that the framers or the 19^th century court could have foreseen corporate influence in contemporary America.  Arguments that rely on original intent or a textual reading of the Constitution fall short of providing truly convincing support for our current understanding of corporate personhood.  OWS is probably right.  Corporations are not people and should not be granted certain constitutional rights.  The challenge now is how to regain that balance between promoting enterprise and protecting democracy.