Fixing Corporations - Part 1:
Legacy of the Founding Parents
Environmental Research Foundation
P.O. Box 5036, Annapolis, MD 21403
Fax (410) 263-8944; Internet: firstname.lastname@example.org
by Jane Anne Morris 
The people who founded this nation didn't fight a war so that
they could have a couple of "citizen representatives"
sitting in on meetings of the British East India Company. They
carried out a revolution in order to be free of oppression: corporate,
governmental, or otherwise; and to replace it with democratic
It seems that things have slipped a little. Today, as soon
as any group or movement puts together a coherent critique of
the role of corporations, tongues start clucking. Politicians,
mainstream reformers, degreed experts, and media commentators
fall all over each other in an effort to dismiss such clear, practical,
focused thinking as mere "conspiracy theories" cooked
up by unbalanced "crackpots."
They forget that 17th century political philosopher Thomas
Hobbes called corporations "worms in the body politic."
 Adam Smith condemned them for their effect in curtailing "natural
liberty." And most of the so-called "founding fathers"
of this nation shared an opinion of corporations that today would
earn them the label "lunatic fringe" from the same mainstream
Those who won independence from England hated corporations
as much as they hated the King. For it was through state-chartered
corporations that the British government carried out some of its
most pernicious oppression. Governments extending their power
by means of corporations, and corporations themselves taking on
the powers of government, are not new problems.
Because they were well aware of the track record of government-chartered
corporations, and because they guarded their freedom so jealously,
citizens of the newly independent United States of America chartered
only a handful of corporations in the several decades after independence.
On those few occasions when states did charter a corporation,
"the powers which the corporation might exercise in carrying
out its purposes were sparingly conferred and strictly construed."
But inevitably, the generation that had fought against injustices
perpetrated by corporations like the British East India Company
and the Hudson Bay Company was followed by others whose memories
of corporate oppression were less vivid. Still, the warnings against
On the eve of his becoming Chief Justice of Wisconsin's Supreme
Court, Edward G. Ryan said ominously in 1873,
"[There] is looming up a new and dark power... the enterprises
of the country are aggregating vast corporate combinations of
unexampled capital, boldly marching, not for economical conquests
only, but for political power.... The question will arise and
arise in your day, though perhaps not fully in mine, which shall
rule --wealth or man [sic]; which shall lead --money or intellect;
who shall fill public stations --educated and patriotic freemen,
or the feudal serfs of corporate capital...." 
The feudal serfs of corporate capital made a lot of headway
during the next fifteen years. But in 1888 President Grover Cleveland
echoed Justice Ryan's sentiments:
"Corporations, which should be the carefully restrained
creatures of the law and the servants of the people, are fast
becoming the people's masters." 
Well into the twentieth century corporate excesses were acknowledged
and condemned by some pretty prominent persons. Louis D. Brandeis,
a multimillionaire (from his own law practice and astute investments)
by the time he became a Supreme Court Justice in 1916, referred
to corporations as "the Frankenstein monster which States
have created by their corporation laws." 
Far from being "radical," harsh criticism of corporations
has a long, respectable, and mainstream political lineage. Now
that you know you're in good company, let's dream a little. Imagine
what grassroots environmental activism would be like if corporations
were restructured to be responsive to the people and to serve
the public interest.
** corporations were required to have a clear purpose, to
be fulfilled but not exceeded. 
** corporations' licenses to do business were revocable by
the state legislature if they exceeded or did not fulfill their
chartered purpose(s). 
** the state legislature could revoke a corporation's charter
for a particular reason, or for no reason at all. 
** the act of incorporation did not relieve corporate management
or stockholders/owners of responsibility or liability for corporate
** as a matter of course, corporation officers, directors,
or agents could be held criminally liable for violating the law.
** state (not federal) courts heard cases where corporations
or their agents were accused of breaking the law or harming the
** directors of the corporation were required to come from
among stockholders. 
** corporations had to have their headquarters and meetings
in the state where their principal place of business was located.
** corporation charters were granted for a specific period
of time, like 20 or 30 years (instead of being granted "in
perpetuity," as is now the practice.) 
** corporations were prohibited from owning stock in other
corporations in order to prevent them from extending their power
** corporations' real estate holdings were limited to what
was necessary to carry out their specific purpose(s). 
** corporations were prohibited from making any political
contributions, direct or indirect. 
** corporations were prohibited from making charitable or
civic donations outside of their specific purposes. 
** state legislatures set the rates that corporations could
charge for their products or services. 
** all corporation records and documents were open to the
legislature or the state attorney general. 
ALL OF THESE PROVISIONS WERE ONCE LAW IN THE STATE OF WISCONSIN
And similar ones in most other states.
There is no reason why grassroots activists can not insist
that we once again impose similar laws to direct corporate actions.
But because education and media corporations are silent about
the power of the sovereign people literally to dictate terms to
corporations, we instead spend our time fighting in regulatory
agencies and courts where the odds are against us from the get-go.
Much activism today concerns itself with struggling to induce
government agencies to enforce their own laws, or exerting superhuman
efforts to close gaping loopholes in existing laws. When we're
not doing that, we're perhaps trying to add an obviously toxic
chemical to a list of prohibited substances. Or maybe we're trying
to coax a corporation that profited greatly from poisoning our
air and water to pay for even a small portion of the cleanup costs.
One reason that we the sovereign people don't know our own
strength is that too often we think of corporations and business
as more or less synonymous. But corporations are not simply big
businesses. You don't need a corporate charter to sell apples
on the corner, or to operate a widget factory. Individuals, sole
proprietorships, partnerships and other business forms can do
business without obtaining a corporate charter from a state. Corporations
are a special case.
A corporate charter granted by a state gives special privileges
not possessed by other businesses. And in return, the state retains
the power to alter, amend, or repeal said charter. The legislature
of a state thus possesses not only the power to grant charters
but to revoke them. This power is laid out in what is called the
"reserved power clause," and is explicitly spelled out
in the laws or constitution of almost every state. Corporations
are all set up by states to serve a "public need" and
act "in the public interest." This is a long-established
The corporation, insofar as it is a legal entity, is a creation
of the state... It is presumed to be incorporated for the benefit
of the public. 
Corporations are instrumentalities of the state, not independent
entities. How have we strayed so far from this notion?
Next week, we will outline some of the legal doctrines that
were built up as obstacles to the sovereign people's ability to
direct corporate actions. Then we will explore the potential of
specific provisions --similar to the ones enumerated above --that
we can add to state constitutions, corporation laws, or corporate
charters themselves, to reclaim our historic right to make corporations
serve the public interest.
===============  Jane Anne Morris is a corporate anthropologist
working on corporation issues as part of Democracy Unlimited of
Wisconsin Cooperative. [Join them: 29 E. Wilson, Ste. 201, Madison
WI 53703; phone (608) 255-6629; fax (608) 255-6643]. She is author
of NOT IN MY BACK YARD: THE HANDBOOK (San Diego: Silvercat Publications
[(888) 299-9119], 1994).
 Thomas Hobbes (1588-1679), English philosopher.
 In his WEALTH OF NATIONS (1776), Adam Smith was concerned
that people's liberty was being encroached upon through the use
of corporations to restrain competition and establish monopolies.
 A discussion of this and related issues can be found in
TAKING CARE OF BUSINESS: CITIZENSHIP AND THE CHARTER OF INCORPORATION,
a pamphlet by Richard L. Grossman and Frank T. Adams, 1993, available
for $4 from Charter, Ink., P.O. Box 806, Cambridge, MA 02140.
 See note 3.
 Justice Louis Brandeis in Liggett v. Lee, 1933, 288 U.S.
 Alfons J. Beitzinger, EDWARD G. RYAN: LION OF THE LAW
(Madison: The State Historical Society of Wisconsin, 1960), pgs.
115-116. From an 1873 address to the graduating class of the University
of Wisconsin Law School.
 Grover Cleveland, "Fourth Annual Message to Congress,
3 Dec. 1888," in MESSAGES AND PAPERS OF THE PRESIDENTS Vol.
8, pgs. 773-4 (James D. Richardson, editor, 1989)
 On personal finances, see Melvin I. Urofsky, LOUIS D.
BRANDEIS AND THE PROGRESSIVE TRADITION (Boston: Little, Brown
& Co., 1981), pg. 9; Brandeis, Liggett v. Lee, 288 U.S. 517
 Wis. G.L. 1864, Ch. 166, Sec. 7; Wis. R.S. 1878, Sec.
 See the "reserved power" clause.
 Wis. A.G. Op. (1913), Vol. 2 p. 169.
 Act of Aug. 21, 1848, Wis. Laws, p. 148 (Gen. Incorp.
for Plank Roads).
 State ex rel. Kropf v. Gilbert, 251 N.W. 478 (1934).
 Dudley O. McGovney, "A Supreme Court Fiction: Corporations
in the Diverse Citizenship Jurisdiction of the Federal Courts,"
HARVARD LAW REVIEW Vol. 16 (May 1943), pgs. 853-898, 1090-1124,
 Wis. R.S. 1878, Sec. 1776; Wis. Stat. 1931, 180.13.
 Wis. G.L. 1864, Ch. 166, Sec. 9.
 Wis. G.L. 1864, Ch. 166, Secs. 4,33.
 Wis. R.S. 1878, Sec. 1775.
 Wis. R.S. 1849, Ch. 54 Sec. 7; Wis. G.L. 1864, Ch. 166,
Secs. 6, 15.
 And it was a felony to do so. Wis. State 1953, Ch. 346.12-346.15.
 For example, Wis. G.L. 1864, Ch. 166, Sec. 7. See also
the author's, "America Needs a Law Prohibiting Corporate
Donations," in SYNTHESIS/REGENERATION 9: A MAGAZINE OF GREEN
SOCIAL THOUGHT, Winter 1996.
 Stone v. State of Wisc., 94 U.S. 181 (1876).
 Wis. R.S. 1849, Ch. 54, Sec. 22.
 U.S. Supreme Court Justice Henry Billings Brown, in Hale
v. Henkel (1905) 201 U.S. 43, 74-5.