Last week, the Supreme Court agreed to hear a case challenging the Obama administration’s HHS mandate on the grounds that it violates the religious liberties of two companies, Conestoga Wood Specialties and Hobby Lobby. One of the main objections to the plaintiff’s complaint is that the First Amendment does not protect the rights of corporations. A similar claim was made when the Supreme Court protected corporations’ political speech in the Citizens United case. Such protections are actually a longstanding right of American corporations.
Presidential candidate Mitt Romney was ridiculed for saying that “corporations are people” at the Iowa State Fair in 2011.
#ad#But Romney was right. The idea that corporations are not persons or citizens entitled to constitutional protection is among the oldest of left-wing populist canards. In reality, there is a long history of the legal recognition of corporate personhood.
At the time the Constitution was adopted, there were very few corporations, and for most of the 19th century business was carried on through partnerships. Corporations were chartered by special acts of state legislatures for extraordinary, public-service purposes. But this did not mean that they were mere creatures of the state, with no rights of their own.
In 1815, the Supreme Court prevented the state of Virginia from dispossessing the property of the Anglican Church after that church had been disestablished.
Four years later, the Court gave its most famous defense of corporate rights, in the Dartmouth College case. The college had been founded in 1769 by a charter from King George III. In the early 19th century, the Jeffersonian Republicans of New Hampshire considered Dartmouth a redoubt of Federalism, if not outright Toryism. So the state legislature enacted a law that replaced the college’s trustees with members more favorable to their party, which the Supreme Court struck down as a violation of the Constitution’s prohibition on states’ impairing the obligation of contracts.
Chief Justice John Marshall defended the college as “an eleemosynary [charitable] and private corporation,” the mission of which the state could not simply reorient. This was a great boon to corporations, which states were now creating for all kinds of private purposes, without the need for special legislative acts, under “general incorporation” laws.
Marshall’s successor, Roger B. Taney, though he carried on Andrew Jackson’s “war” against the Bank of the United States, also recognized the legal rights of corporations. The Taney Court held, for example, that corporations could sue in federal courts under Article III’s grant of jurisdiction in suits between “citizens of different states.” They did not, however, have all of the “privileges and immunities” of citizens that are protected in Article IV. The Court also assumed that corporations chartered in other states (“foreign” corporations) could do business in any state that did not explicitly prohibit them.
#page#This was a perfectly commonsense approach, recognizing that corporations were persons for some purposes but not for others. They can make contracts and be sued, but cannot marry (yet) or vote.
The legend of corporate personhood as a bogus idea arose out the 1886 case of Santa Clara County v. Southern Pacific Railroad. The Fourteenth Amendment, enacted in 1868, protects the privileges and immunities of all citizens, and provides that no person can be deprived of life, liberty, or property without due process of law or denied the equal protection of the laws. The progressive historians Charles and Mary Beard claimed that this amendment, ostensibly written to protect former slaves, was really concocted to protect business corporations. In their 1927 book The Rise of American Civilization, the Beards alleged that Senators John A. Bingham and Roscoe Conkling planted the term “persons” in addition to “citizens” into the amendment at the behest of “individuals and joint stock companies [who] were appealing for congressional and administrative protection against invidious and discriminating state and local taxes.” In what Yale Law professor John Witt calls “a Da Vinci Code–like story,” progressives surmise that the Court abandoned former slaves and used the Fourteenth Amendment instead to protect big business.
#ad#Though this “conspiracy theory” of the Fourteenth Amendment was duly debunked by scholars, particularly Howard Jay Graham, it continues to crop up in popular literature and the media. It was even resurrected on the Court itself in the 1930s. Justice Hugo Black revived it in a 1938 dissent. “I do not believe the word ‘person’ in the Fourteenth Amendment includes corporations,” he said. “A constitutional interpretation that is wrong should not stand. I believe this Court should now overrule previous decisions which interpreted the Fourteenth Amendment to include corporations.”
Even Black’s liberal colleagues found this argument embarrassing (they were simultaneously embarrassed by the revelation that Black had been a member of the Ku Klux Klan) and had Felix Frankfurter instruct him in constitutional law. Only Justice William O. Douglas, another notorious judicial activist, adopted Black’s theory.
It is true that the Court held that corporations did not have the same liberties as natural persons. But liberals began to favor the extension of those liberties in the post–World War II period, when the Court recognized that associations such as the NAACP and the Congress of Racial Equality had rights that states could not infringe — as when Alabama, for example, demanded that the NAACP hand over its membership and donor lists.
Though it still prompts hysterical reactions and conspiracy theories on the left, there has never been any substantial controversy in mainstream judicial thought over corporate personality. When Congress compiled the laws of the nation in the United States Code, its first section read, “the words ‘person’ and ‘whoever’ include corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals.”
John Marshall could have said it better, but not more comprehensively.
— Paul Moreno is the director of academic programs at Hillsdale College’s Kirby Center for Constitutional Studies and Citizenship.