Screwed the Undeclared War Against the Middle Class (18 page)

The colonists had achieved a middle-class lifestyle, and, as history shows, this will always lead people to try to institute democracy. The colonists pushed for this—at least locally—and tried to reason with King George through their appointed rulers. They
tried to democratically elect representatives to talk with the local governors, but King George disbanded their elected assemblies. Instead, in areas where protest was especially strong, the king dispatched spies to haul off protestors without warrant and hold them in jail without trial. In some cases protestors would be taken overseas to King George's own version of Guantánamo.

Kings do that sort of thing.

What really riled the colonists, however, was not just King George's exercise of arbitrary power. It was that he wielded that power to enrich a private corporation—the most anti-democratic of institutions—and one that was actively working against the interests of the emerging American middle class.

The American Revolution began as a revolt against the corporatocracy of the 1700s.

The American colonialists drank a lot of tea. It was their drug of choice, much as coffee is today. And it was owned by a monopoly.

Conventional wisdom has it that the Tea Act of 1773—a tax law passed in London that led to the Boston Tea Party—was simply an increase in the taxes on tea paid by American colonists. In reality, however, the Tea Act gave what was then the world's largest transnational corporation—the East India Company—full and unlimited access to the American tea trade, and it exempted the company from having to pay taxes to Britain on tea exported to the American colonies. It even gave the company a
tax refund
on millions of pounds of tea it was holding in inventory, unable to sell.

The primary purpose of the Tea Act was to increase the profitability of the East India Company to its stockholders (which included King George III and the wealthy elite that kept him secure in power) and to help the company drive its colonial small-business competitors out of business. Because the company no longer
had to pay high taxes to England and held a monopoly on the tea it sold in the American colonies, it was able to lower its prices to undercut those of the local tea importers and the mom-and-pop merchants and tea houses in every town in America.

This infuriated the independence-minded American colonists, who were wholly unappreciative of their colonies' being used as a profit center for the world's largest multinational corporation. They resented that their small businesses still had to pay the higher, pre–Tea Act taxes without having any say or vote in the matter (thus the cry of "No taxation without representation!"). Even in the official British version of the history, the Tea Act of 1773 was a "legislative maneuver by the British ministry of Lord North to make English tea marketable in America" with a goal of helping the financially troubled East India Company quickly "sell 17 million pounds of tea stored in England."
¹

The battle between the small businessmen of America and the huge multinational East India Company actually began in Pennsylvania, according to one observer. "At Philadelphia," he writes, "those to whom the teas of the [East India] Company were intended to be consigned, were induced by persuasion, or constrained by menaces, to promise, on no terms, to accept the proffered consignment."

Resistance was organizing and growing, and the Tea Act marked the boiling point. The colonists were preparing to throw off a corporation that for almost two hundred years had determined nearly every aspect of their lives through its economic and political power. They were planning to destroy its goods, intimidate its employees, and face down the guns of the government that supported it.

A pamphlet called
The Alarm
, signed by an enigmatic "Rusticus," circulated through the colonies. One issue made clear
the feelings of colonial Americans about England's largest trans-national corporation and its behavior around the world:

Are we in like Manner to be given up to the Disposal of the East India Company, who have now the Assurance, to step forth in Aid of the Minister, to execute his Plan, of enslaving America? Their Conduct in Asia, for some Years past, has given simple Proof, how little they regard the Laws of Nations, the Rights, Liberties, or Lives of Men. . . . Fift een hundred Thousands, it is said, perished by Famine in one Year, not because the Earth denied its Fruits; but [because] this Company and their Servants engulfed all the Necessaries of Life, and set them at so high a Rate that the poor could not purchase them.

The pamphleteering worked. The tea ships were turned back at harbors in Pennsylvania and New York. Then, on a cold November evening, they arrived in Boston. The next morning the following notice was widely circulated:

Friends, Brethren, Countrymen! That worst of plagues, the detested TEA, has arrived in this harbour. The hour of destruction, a manly opposition to the machinations of tyranny, stares you in the face. Every friend to his country, to himself, and to posterity, is now called upon to meet in Faneuil Hall, at nine o'clock, this day, at which time the bells will ring, to make a united and successful resistance to this last, worst, and most destructive measure of administration.

The reaction to the pamphlet—an example of what was truly a "free press" in America—was emphatic. People came to the meeting place from within the city and from neighboring towns. Those who assembled in Boston faced the same issue that citizens who oppose combined corporate and co-opted government power all over the world confront today: Should they take on a well-financed and heavily armed opponent when such resistance could lead to their own imprisonment or death? Even worse, what if they lost the struggle, leading to the imposition on them and
their children of an even more repressive regime to support the profits of the corporation?

The citizens chose to act. They threw 342 chests of tea—valued at 9,659 pounds sterling or, in today's currency, just over a million U.S. dollars—overboard in an act of protest they called the Boston Tea Party.

In response, the British Parliament passed the Boston Port Act, which stated that Boston's port would be closed until its citizens reimbursed the East India Company for the tea they'd destroyed. The colonists refused.

A year and a half later, the colonists again openly stated their defiance of the East India Company and Great Britain by taking on British troops in an armed conflict at Lexington and Concord ("the shot heard 'round the world") on April 19, 1775.

They explained their action in 1776 in the document they titled the Declaration of Independence. Among their reasons for separating America from Britain: "For cutting off our Trade with all parts of the world: For imposing Taxes on us without our Consent." The British had used tax and anti-smuggling laws to make it nearly impossible for American small businesses to compete against the huge East India Company, and the Tea Act of 1773 was the last straw.

Once the Revolutionary War was over and the Constitution had been worked out and presented to the states for ratification, Thomas Jefferson turned his attention to what he and James Madison felt was a terrible inadequacy in the new Constitution: it didn't explicitly stipulate the "natural rights" of the new nation's citizens, and it didn't protect against the rise of new commercial monopolies like the East India Company.

On December 20, 1787, Jefferson wrote to Madison about these concerns. He said, bluntly, that the Constitution was deficient
in several areas, including "restriction of monopolies." Madison agreed and joined Jefferson in pushing for a law, which, as they wrote it, would "ban monopolies in commerce."

Although Jefferson was specifically talking about corporations using copyright laws to monopolize marketplaces for intellectual properties, it was part of a broader effort by many of the Founders to prevent anything like an East India Company from ever arising in America again. As part of that effort, the states passed hundreds of laws restricting and restraining corporations.

Wisconsin, for example, passed a law that stated:

No corporation doing business in this state shall pay or contribute, or offer consent or agree to pay or contribute, directly or indirectly, any money, property, free service of its officers or employees or thing of value to any political party, organization, committee or individual for any political purpose whatsoever, or for the purpose of influencing legislation of any kind, or to promote or defeat the candidacy of any person for nomination, appointment or election to any political office.

The penalty for any corporate official's violating that law and getting cozy with politicians on behalf of a corporation was five years in prison and a substantial fine.

These laws prevented corporations from harming humans while still allowing people to create their corporations and use them to make money. Everybody won.

In the 1886
Santa Clara County v. Southern Pacific Railroad
case, the U.S. Supreme Court ruled that the state tax assessor, not the county assessor, had the right to determine the taxable value of fence posts along the railroad's right of way.

In writing up the case's headnote, however—a commentary that has no legal status—the court reporter, a former railroad
president named J. C. Bancroft Davis, opened the headnote with the sentence: "The defendant Corporations are persons within the intent of the clause in section 1 of the Fourteen Amendment to the Constitution of the United States, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws."

Oddly, the court had ruled no such thing. A handwritten note from Chief Justice Morrison Remick Waite to reporter Davis that we found in the National Archives said: "We avoided meeting the Constitutional question in the decision." And nowhere in the decision itself does the Court say corporations are persons.

Nonetheless, corporate attorneys picked up the language of Davis's headnote and began to quote it like a mantra. Soon the Supreme Court itself, in a stunning display of either laziness (not reading the actual case) or deception (rewriting the Constitution without issuing an opinion or having open debate on the issue), was quoting Davis's headnote in subsequent cases. Although Davis's
Santa Clara
headnote didn't have the force of law, once the Court quoted it as the basis for later decisions its new doctrine of corporate personhood became law.

Prior to 1886 the Bill of Rights and the Fourteenth Amendment defined human rights, and individuals—representing themselves and their own opinions—were free to say and do what they wanted. Corporations, being artificial creations of the states, didn't have rights but instead had privileges. The state in which a corporation was incorporated determined those privileges and how they could be used. And the same, of course, was true for other forms of "legally enacted game playing" such as unions, churches, unincorporated businesses, partnerships, and even governments—all of which have only privileges, not rights.

But with the stroke of his pen, the court reporter moved corporations out of that "privileges" category—leaving behind all the others (unions, governments, and small unincorporated businesses still don't have "rights")—and moved them into the "rights"
category with humans, citing the Fourteenth Amendment, which was passed at the end of the Civil War to grant the human right of equal protection under the law to newly freed slaves.

On December 3, 1888, President Grover Cleveland delivered his annual address to Congress. Apparently, the president had taken notice of the
Santa Clara
Supreme Court headnote, its politics, and its consequences, for he said in his speech to the nation, delivered before a joint session of Congress:

As we view the achievements of aggregated capital, we discover the existence of trusts, combinations, and monopolies, while the citizen is struggling far in the rear or is trampled to death beneath an iron heel. Corporations, which should be the carefully restrained creatures of the law and the servants of the people, are fast becoming the people's masters.

Which brings us to the present.

After almost thirty years of conservative economics, America is once again faced with a collection of trusts, combinations, and monopolies that are leaving citizens struggling "far in the rear." This time the corporate conglomerates—big-box retailers, monolithic media, big pharma, and big oil—are making a comeback after having been tamed during the middle of this century.

Call it the Wal-Martization of America—or the death of the American middle class—and with it comes very real danger to the future of democracy.