The rise, fall and resurgence of corporations in the U.S.
Early in our nation’s history, Americans feared corporations as a threat to democracy. They were seriously concerned that the shareholders would amass great wealth, control jobs, buy newspapers, dominate the courts and control elections. Thomas Jefferson expressed his concern about “the selfish spirit of commerce that knows no country, and feels no passion or principle but that of gain.” He believed that the government should have control over corporations, not the other way around.
Up until the Civil War, a corporation could be chartered only for a specific social goal which legislatures deemed to be in the public interest, and only for a limited time period, typically 20-30 years. Constraints were imposed on the number of owners and on the size of both corporate assets and profits, and stockholders were made personally responsible for corporate actions and debts.
In the decades following the Civil War, corporations pressed endlessly to reduce those restrictions and expand their powers, and the courts pretty much gave them what they wanted. In 1886, the U.S. Supreme Court gave corporate officers and owners full constitutional protection, citing the Fifth Amendment to the Constitution, which states that “No person …. shall be deprived of life, liberty, or property without due process of law.” By the beginning of the 20th Century, all stockholder liability and restrictions on the number of stockholders and on the duration of corporations and the size of their assets and profits were gone.
With corporations now enjoying little control, the old fears about amassing of great wealth, control of jobs and newspapers, and domination of the courts and elections were soon realized. The “Gilded Age,” a term coined by Mark Twain, glittered on the surface, but was corrupt underneath. The late 19th century saw the creation of an industrial economy, and corporations became the dominant form of business organization. It was a period of greed and guile; rapacious “Robber Barons,” corporate buccaneers, and unscrupulous speculators ruled the land and “owned” Congress and the courts. It was a time of scandal-plagued politics, vulgar displays of wealth, and exploitation of the working classes, to whom it was becoming evident that their government had become a tool of the powerful rich, and no longer served them.
Soon needed reforms began to emerge. The Interstate Commerce Act (1887) broke up the rate-fixing practices of the railroads, and the Sherman Antitrust Act (1890) outlawed monopolies. But as the 20th century opened, the nation’s economy — banks, railroads, steel, oil production and refining, meatpacking, and manufacturing (particularly farm machinery) — was still dominated by a few large corporations, and price fixing was rampant.
Widespread exploitation of labor was leading to turbulent times. Efforts by laborers to seek better pay, a shorter work week (which at that time was as high as 72 hours), and safe working conditions, were met with attacks from employer-hired goon squads or by National Guard troops called out by the employers to suppress the workers. The result was violent confrontations in which workers were fired upon and killed by troops of their own government.
Real reform measures began with the presidency of Theodore Roosevelt, a progressive Republican, following the assassination of President McKinley in 1901. Pure Food and Drug Legislation and enforcement, major labor reforms, and vigorous enforcement of the Sherman Antitrust Act took place during his administration, reining in corporate power and quelling the unrest that was approaching the boiling point.
World War I united the nation behind a common cause followed by the boom years of the 1920s as the automobile became the foundation of the American economy. Then the Great Depression of the 1930s brought corporate America to its knees. The call to arms of World War II in the 1940s put the country back to work, but the profits of the corporations involved in the war effort were limited by the imposition of an “excess-profits” tax.
The post-war decades were the longest period of prosperity in our country’s history. Corporations and Labor were on a more equal footing than ever before. Corporate profits were up, and wages rose under pressure from the Labor Unions for a share in more of those profits. Higher wages fueled an ongoing prosperity and flow of corporate profits that the corporations did not want to see interrupted, so they acquiesced.
But in the 1980s, things began to change, and a resurgence of corporate power has occurred since then, which will be the subject of my next column.
“As I See It” appears on the first and third Thursdays of the month. Hal Sundin lives in Glenwood Springs and is a retired environmental and structural engineer. Contact him at firstname.lastname@example.org.
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