The piece below was read aloud at Portland, Oregon’s public event: “Roasting 200 Years of Corporate Constitutional ‘Rights’ 1819-2019”. Paul Cienfuegos, Director and Founder of Community Rights US, did the writing and reading of what follows.
In 1816, the society was still primarily composed of small farmers. It was important to them that higher education would be available for their children. (Which actually means – their male children.) During that period, colleges were mainly private schools like Yale, Harvard, and Dartmouth, holdovers from the colonial days.
Their original purpose was to spread the word of Christianity in support of the British Empire, and to educate the children of the elite. For example, Dartmouth College had originally been chartered by the King of England in 1769. And even 50 years after it was chartered, it was still a cog in the colonial machine, supporting and promoting the British Empire.
Led by Jeffersonian Republicans, a national social movement developed after the American Revolution to turn the private colonial colleges into public (or publicly responsible) schools.
In New Hampshire, the movement took the form of “An Act to Amend the Charter and Enlarge and Improve the Corporation of Dartmouth College”. The text of the law, passed in 1816, begins, “Whereas knowledge and learning generally diffused through a Community are essential to the preservation of free Government, and extending the opportunities and advantages of education is highly conducive to promote this end…” So from that quote, you can get a sense of the cultural demands of the time.
The New Hampshire legislature’s law made private Dartmouth College into public Dartmouth University, and ordered it to set up colleges around the state. New Hampshire governor William Plumer promoted the new law, arguing that the original provisions of Dartmouth College “emanated from royalty and contained principles…hostile to the spirit and genius of free government.”
The trustees of Dartmouth objected to the change in their charter and took the state of New Hampshire to court. The New Hampshire State Supreme Court sided with the legislature, arguing that it had the right to change the charter “because it is a matter of too great moment, too intimately connected with the public welfare and prosperity, to be thus entrusted in the hands of a few. The education of the rising generation is a matter of the highest public concerns, and is worthy of the best attention of every legislature.” Again, notice the culture shift going on in rural America.
Dartmouth’s trustees appealed the case to the US Supreme Court in 1819, which reversed the state court’s decision in a ruling titled ‘Trustees of Dartmouth College v. Woodward’. The Supreme Court wasn’t interested in promoting public education. The Court had been set up to be the final protector of a propertied class, and it delivered, ruling that a corporation is a private contract, not a public law. The Court decreed that although the state created the corporation when it issued the charter, it is not sovereign over that charter but is simply a party to the contract. And Dartmouth, now a public university, reverted back again to being just a private college.
The Dartmouth decision established the principle that corporations get constitutional protection because they are private contracts with the state. In other words, the corporate form of doing business was given a constitutional life and constitutional protections for the very first time in this country. The court’s decision was based on their own brand new interpretation of the Contract Clause of the Constitution. That clause prohibits a State from passing any law that “impairs the obligation of contracts”.
But corporations were never intended by our quite revolutionary founders to be “contracts with the state”. In fact, just the opposite was true. After the American Revolution, corporations were explicitly designed as our subordinates, required to serve one specific social need and to cause no harm. Their charters were each written uniquely by a state legislature, and included many prohibitions and requirements. The legislature could and frequently did revoke a corporation’s charter, seize the corporation’s assets, and imprison its directors when necessary.
But after this single Supreme Court ruling in 1819 about Dartmouth College, it was no longer legally possible for any state legislature to amend a corporation’s charter without full consent of the corporation’s Board of Directors.
This decision fundamentally altered the legal relationship between our government and our business corporations, and more importantly still – between We The People and those corporations. And from that year to this, the US Supreme Court has continued to grant one new corporate “right” after another to business corporations.
Two interesting side-notes about this case:
One) Joseph Story was one of the most important members of the US Supreme Court at that time. His political beliefs played a central role in the Dartmouth decision. He believed that contracts were sacred things, and must be regarded with deference, in order to encourage investment and economic growth. Joseph Story also viewed state sovereignty as a threat to the stability of the American empire, so his rulings consistently favored federal jurisdiction over states’ rights.
He was the youngest person ever to be nominated as a Supreme Court Justice at the age of 32! And served for 35 years.
And the Second Side Note) The Dartmouth University website tells the story of this legal battle on a page titled, “A Brief History of the Dartmouth College”, which includes this revealing line:
“The Dartmouth College Case, as it has come to be known, is considered to be one of the most important and formative documents in US constitutional history, strengthening the Contracts Clause of the Constitution and thereby paving the way for all American private institutions [that means all corporations!] to conduct their affairs in accordance with their charters and without interference from the state.”
It is indeed a tragic tale, to know that even with all of the horrendous faults of this nation, our founders were adamant that business corporations were to be literally creations of the state, required to serve us and to cause no harm, and yet just forty years after the Revolution, and exactly 200 years ago this month, corporate directors and their lawyers began to dismantle that system so that now today, the state can only minimally involve itself in the affairs of the corporation.
I encourage everyone here this evening to join us at Community Rights US as we have already successfully begun the long but also hopeful task of dismantling the so-called constitutional “rights” that the US Supreme Court has given to these institutions. Thank you!
(Thanks to Jane Anne Morris for substantial assistance with this history: including excerpts from her book Gaveling Down the Rabble and from her vertical files which she has recently gifted to Community Rights US. Her extensive writings and speeches can be viewed at www.DemocracyThemePark.org.)