A Word About Corporations

Source: The Two Faces of Money

Corporations have been around for centuries, and have long provided both the motivation and means by which empires would be built. As we know, the American colonies developed a strong distaste for corporate power over the colonists’ economic lives. The Boston Tea Party was famous for its protest against the undercutting of colonial profits orchestrated by the British East India Company, and other such corporations.

Thus, as detailed in Defying Corporations, Defining Democracy: A Book of History & Strategy, edited by Dean Ritz:

For one hundred years after the American Revolution citizens and legislators fashioned the nation’s economy by directing the chartering process . . .[because] the laborers, small farmers, traders, artisans, seamstresses, mechanics and landed gentry – who sent King George III packing – feared corporations. . . .They knew that English kings chartered the East India Co., the Hudson’s Bay Co., and many American colonies in order to control property and commerce. Kings appointed governors and judges; dispatched soldiers; dictated taxes, investments, production, labor, markets.

In spite of the long effort of citizens and legislators aimed at “directing the corporate chartering process”, the 14th amendment provided the means by which corporations were given person-hood – while the “new legal regime” created by the Reconstruction amendments increased the “police powers” of the federal government, thereby diminishing the sovereign rights of ordinary citizens.

The resulting grid of new legislation then paved the way for the Gilded Age of the closing decades of the 19th century and an almost unrelenting onslaught of corporate affronts to ordinary people. (For more see Chapter 2 of The Two Faces of Money).

Thus, as again detailed in Defying Corporations, Defining Democracy: A Book of History & Strategy:

Just at the time when the Supreme Court was bestowing legal person hood upon corporations these same corporations were working children to death and using convicts to break strikes. Carnage prevailed in the nation’s mines and mills. By the 1890’s, railroad corporations were killing 6000-7000 people a year and injuring over 30,000 people a year – employers, passengers and just people who happened to get in the way. . .
The owners of western railroad corporations had walked off with 180 million acres of public land. Federal judges were declaring unions to be criminal conspiracies. Corporate and government troops were bloodying and killing working people and Native Americans who dared to organize for their lives, their liberties, rights and pursuit of happiness. . .

Most remarkably, we find – both through present experience and the kind of historical evidence described in the above passage – that laws and regulations (created largely through the expansion of federal police powers provided by the Reconstruction amendments and the “new legal regime”) have been overwhelmingly ineffectual. This reality is summarized nicely by the same book:

Today, our regulatory and administrative laws are a stacked deck, granting corporations legal clout while disadvantaging peoples, communities and nature. . .
. . .[T]he history of such laws suggests that, starting with the Interstate Commerce Act in 1887 and the Sherman Anti-Trust Act in 1890, they were used to divert angry people who had been organizing to get power over corporations. . .

Decades later, when key pieces of FDR initiatives, including the Agricultural Adjustment Act, began to be ruled unconstitutional by the Supreme Court FDR threatened to “pack the court” – after which the Court shifted away from the “doctrine of original understanding” to the concept that the constitution was an “evolutionary document.” The effects of this can be seen in the ever-expanding commerce power and accompanying rules, statutes and regulations. As Law Professor Robert G. Natelson asserts in a scholarly article titled “Tempering the Commerce Power“:

The Supreme Court’s modern interpretation of the Necessary and Proper Clause in the realm of interstate commerce is textually problematic, unfaithful to the Constitution’s Original meaning, and contains positive incentives for Congress to over-regulate. [present author’s emphasis]

In addition, Congress has delegated much of it’s regulatory powers in a most unconstitutional way. For example the Federal Register, created in 1935 and then expanded in 1946, effectively enables government agencies as well as the President to create legislation, whereas the Constitution specifically charges Congress with legislative authority. Many of these government agencies were created by New Deal initiatives, along with deficit spending that was required to support these agencies. This then of course resulted in a top-down managed economy.

In other words, and as detailed by John Kenneth Galbraith in his book Money: Whence It Came, Where It Went:

Specifically, in the early part of the last century and before, money was important. Corporations had no general power to move prices. Unions, effectively, did not exist. The taxes and expenditures of national states were controlled by the exigencies of war and peacetime need, not by what was required for economic performance. What was used as money and how much there was of it made a difference; the instinct of the men who followed Bryan (and those who opposed him) was not wrong.
In modern times, as we have seen, the national budget has become a decisive factor in economic performance. It extensively determines whether demand will expand, prices rise, unemployment increase and – in consequence of government borrowing and the resulting deposit creation – whether the supply of money will expand. And institutions – corporations, trade unions and the larger currents of international trade and finance – have invaded and modified the world and the effect on prices that were once dominated by money. Monetary policy has become a secondary part of modern life. And, as we have sufficiently seen, it has become an instrument of politics, bearing strongly on the question of who controls economic rewards.
Nor is this all. We have seen that currencies now accumulate in large agglomerations outside of the country of issue. And the transnational bank or transnational corporation that holds or owns these accumulations can move them into other currencies and out again in a volume that is far beyond the remedial and stabilizing capacity of the existing machinery for monetary stabilization. Thus the modern problem of monetary management has a much greater international dimension than ever before. p311-312

So it is that the long sweep of history clearly reveals an underlying truth: the “money power” has power greater than any corporation on earth – power greater even than that of governments or elected officials, and because of this fact, the “money power” requires special consideration beyond that of any corporation. This “octopus graphic” says it all.

Republican Congressman of Minnesota Charles A. Lindberg Sr. (1907-1917), father of the famed and somewhat notorious aviator, put the situation created by the money trust this way:

Those not favorable to the money trust could be squeezed out of business and the people frightened into demanding changes in the banking and currency laws which the Money Trust would frame.

Lindbergh also declared that:

The government prosecuted other trusts, but supports the money trust.

Lindbergh was protesting against the Federal Reserve Act of 1913 which delegated Congress’s authority to regulate the monetary system to the Federal Reserve. Thus, it is important to understand that the Federal Reserve System is itself a complex of twelve regional banking corporations, with the New York Fed “playing the lead role”. A New York Fed publication titled “I Bet You Thought” says:

The twelve regional reserve banks aren’t government institutions but corporations nominally “owned” by member commercial banks, who must buy special non-marketable stock in their district Federal Reserve Bank.

From this it becomes apparent that there is no more pressing task before us than to initiate honest monetary reform which includes: a) repeal of the Federal Reserve Act (and the National Bank Act of 1864), b)dissolving the power structure surrounding the Fed, and c) installing Constitutional, debt “free”, “democratic” money.

Part of the power structure surrounding the Federal Reserve includes corporations which have been endowed with “person-hood” and which are protected by a massive phalanx of local, state, federal – and yes, even international laws and agreements such as the WTO and NAFTA. Some food for thought regarding corporations – including incorporated banks – is provided by Defying Corporations, Defining Democracy: A Book of History & Strategy:

“Here is one cluster of ideas for rewriting the Defining Law of corporations. It’s not a 3-point plan, and it’s not the beginning of a 20-point plan- just some ideas to think about. . .

  1. Prohibit corporations from owning stock in other corporations. Owning stock in other corporations enables corporations to control huge markets and shift responsibility, liability, resources, assets and taxes back and forth among parent corporations, subsidiaries and other members of their unholy families. By defining corporations in such a way to prohibit such ownership, much of the anti-trust regulatory law becomes unnecessary and superfluous.
  2. Prohibit corporations from being able to choose when to go out of business (in legalese, no voluntary dissolution). This would prevent corporations from dissolving themselves when it came time to pay taxes, repay government loans, pay creditors, pay pensions, pay for health care, and pay for toxic cleanups
  3. Make stockholders liable for a corporation’s debts. People who want to be stockholders would reallocate their resources to corporations that they knew something about, that weren’t engaged in risky, toxic projects. (This would encourage local, sustainable businesses and healthy local economies. Imagine that.)

These 3 measures might seem “unrealistic” to some but it beats the heck out of a voluntary code of conduct, or a wasted decade at a regulatory agency. All three of these provisions were once common features of state corporate codes. No wonder corporate apologists prefer that we hang around in the regulatory agencies with our heads spinning with parts per million and habitat conservation plans. . . These three measures were quite effective, which is why corporate lawyers worked so hard to get rid of them. But they only address a tiny portion of what needs to be done. . .

Here’s another cluster of ideas for ways to shape a democratic process that is about people. (The idea that corporations have “rights” would seem nonsensical to any but a colonized mind.)

  1. No corporate participation in the democratic process. Democracy is for and about human beings. Corporations should be prohibited from paying for any political advertisements, making any campaign contributions, or seeking to influence the democratic process in any way.
  2. Corporations have no constitutional rights. A corporation is an artificial creation set up to serve the public need – not an independent entity with intrinsic “rights”.
  3. Corporations should be prohibited from making any civic, charitable, or educational donations. Such donations are used to warp the entire social and economic fabric of society, and make people afraid to speak out against corporations.

These probably seem even more “unrealistic” than the first batch. . . . these were all once laws too.”


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