Twelve: Creating a Corporate Paradise
On October 7, 1763 the new king of England, then 25 years old, issued new law of the land for America, called the It announced several radical changes to British policy in America. It announced that the corporations would be stripped of most of their powers. As soon as the details were worked out, they would lose the right to control the governments of America and new governments would be put into place. The proclamation announced that the laws the corporations had passed to help them exploit the lands would be replaced by new laws that were ‘as close to the laws of England as practical’ would replace them.
Slavery was not legal in England and all of the kings new possessions in America would have to bring themselves into compliance with the law.
British courts had already ruled, in numerous cases, that all persons were entitled to equal protection of the law, regardless of their race. Once the new laws were put into place, even Negroes and members of races native to the western hemisphere (collectively called ‘Indians’) would have the same exact right to participate in government as people from European races.
The biggest change the proclamation announced, however, involved the protection of treaties that had granted the American natives all land west of the Appalachian divide. The government of England would enforce these treaties. Any who violated them, even to walk on land granted to the natives without specific written permission from the natives, was guilty of treason, a capital offence. Let’s consider a few important passages on the proclamation, to see how they might impact people like Washington, Jefferson, and others who had adjusted to a way of life that granted them all of the powers and rights of kings themselves:
The Proclamation of 1763
BY THE KING. A PROCLAMATION
Whereas We have taken into Our Royal Consideration the extensive and valuable acquisitions in America, secured to our Crown by the late definitive Treaty of Peace, concluded at Paris, the 10th day of February 1763; and being desirous that all Our loving Subjects, as well of our Kingdom as of our Colonies in America, may avail themselves with all convenient Speed, of the great Benefits and Advantages which must accrue therefrom to their Commerce, Manufactures, and Navigation, We have thought fit, with the Advice of our Privy Council, to issue this our Royal Proclamation, hereby to publish and declare to all our loving Subjects, that we have, with the Advice of our Said Privy Council, granted our Letters Patent, under our Great Seal of Great Britain, to erect, within the Countries and Islands ceded and confirmed to Us by the said Treaty, Four distinct and separate Governments, styled and called by the names of Quebec, East Florida, West Florida and Grenada.
Before this time, the chartered corporations and proprietors, through their administrative bodies, made their own laws.
The corporations and proprietors wanted to make money.
They made laws that made it easier for them to make money.
People who bought large tracts of land got rights to participate in the ‘upper house’ of government, the house that made all important rules. People who bought smaller tracts could vote in the elections of the ‘lower house,’ and have some say in the operation of the nation. People who did special favors for the corporations, or had large numbers of shares, would be given large tracts of land and the governmental power that went with the land. People who didn’t own corporate shares or land, and didn’t know people who could help them in either the government or the corporations, couldn’t participate in government at all.
This would change. The British government was announcing new governments that would work this way:
As the state and circumstances of the said Colonies will admit thereof, they shall, summon and call General Assemblies within the said Governments respectively, in such Manner and Form as is used and directed in those Colonies and Provinces in America which are under our immediate Government:
And We have also given Power to the said Governors, with the consent of our Said Councils, and the Representatives of the People so to be summoned as aforesaid, to make, constitute, and ordain Laws. Statutes, and Ordinances for the Public Peace, Welfare, and good Government of our said Colonies, and of the People and Inhabitants thereof, as near as may be agreeable to the Laws of England, and under such Regulations and Restrictions as are used in other Colonies.
In the mean Time, and until such Assemblies can be called as aforesaid, all Persons Inhabiting in or resorting to our Said Colonies may confide in our Royal Protection for the Enjoyment of the Benefit of the Laws of our Realm of England; for which Purpose We have given Power under our Great Seal to the Governors of our said Colonies respectively to erect and constitute, with the Advice of our said Councils respectively, Courts of Judicature and public Justice within our Said Colonies for hearing and determining all Causes, as well Criminal as Civil, according to Law and Equity, and as near as may be agreeable to the Laws of England, with Liberty to all Persons who may think themselves aggrieved by the Sentences of such Courts, in all Civil Cases, to appeal, under the usual Limitations and Restrictions, to Us in our Privy Council.
Only a small part of the lands Britain had acquired had any Euro Americans on them at all. Virtually everyone on the western 4/5th of the land England had acquired were members of the races that the people on the other 1/5th of the land typically called ‘Indians.’
British courts had already ruled that the rights of people don’t depend on their race. The people in the corporate lands would have to bring themselves into compliance with these existing laws. The people they called ‘Indians’ were to be considered to be real human beings with real rights.
The corporate leaders realized what considering American natives to be real humans with the same human rights as non-native people would dramatically alter the realities of government in America: The western 4/5th of the land England had gotten in the war had virtually no white presence. The natives would have the authority to make their own rules, with the full support of the British government.
The Euro Americans had many reasons to fear this change. The corporate leaders realized that this change would make it impossible to exploit the land west of the divide. The Ohio Company (Washington’s company), Loyal Land Company (Jefferson’s company) and others that had invested fortunes in development to make land west of the divide accessible would not be able to generate revenue to cover their already-sunk costs. They would lose everything they had invested.
But there were other major problems with racial equality: Even in the eastern areas, the Euro-Americans that were in total control of all government apparatus were not in the majority in many places.
Roughly ¼ of the total population of the area west of the divide were slaves with African heritage. In areas where the plantation system prevailed, a tiny number of Euro-Americans owned an enormous number of Afro-Americans. (George Washington owned 311 slaves for example; Thomas Jefferson owned 175.) In the plantation areas, African Americans outnumbered Euro-Americans. If every human being had an equal say in government, African Americans would be able to control the governments in the plantation areas, the places where the richest and most powerful whites lived.
The Great Divide
The next section of the proclamation required all Euro-Americans west of the divide to move east of the divide, abandon their territory, and never return except with the express permission of American natives:
And whereas it is just and reasonable, and essential to our Interest, and the Security of our Colonies, that the several Nations or Tribes of Indians with whom We are connected, and who live under our Protection, should not be molested or disturbed in the Possession of such Parts of Our Dominions and Territories as, not having been ceded to or purchased by Us, are reserved to them, or any of them, as their Hunting Grounds.
We do therefore, with the Advice of our Privy Council, declare it to be our Royal Will and Pleasure, that no Governor or Commander in Chief in any of our Colonies of Quebec, East Florida, or West Florida, do presume, upon any Pretence whatever, to grant Warrants of Survey, or pass any Patents for Lands beyond the Bounds of their respective Governments as described in their Commissions: as also that no Governor or Commander in Chief in any of our other Colonies or Plantations in America do presume for the present, and until our further Pleasure be known, to grant Warrants of Survey, or pass Patents for any Lands beyond the Heads or Sources of any of the Rivers which fall into the Atlantic Ocean from the West and North West, or upon any Lands whatever, which, not having been ceded to or purchased by Us as aforesaid, are reserved to the said Indians, or any of them.
And We do further declare it to be Our Royal Will and Pleasure, for the present as aforesaid, to reserve under our Sovereignty, Protection, and Dominion, for the use of the said Indians, all the Lands and Territories not included within the Limits of Our said Three new Governments, or within the Limits of the Territory granted to the Hudson’s Bay Company, as also all the Lands and Territories lying to the Westward of the Sources of the Rivers which fall into the Sea from the West and North West as aforesaid.
And We do hereby strictly forbid, on Pain of our Displeasure, all our loving Subjects from making any Purchases or Settlements whatever, or taking Possession of any of the Lands above reserved, without our especial leave and Licence for that Purpose first obtained.
And We do further strictly enjoin and require all Persons whatever who have either willfully or inadvertently seated themselves upon any Lands within the Countries above described or upon any other Lands which, not having been ceded to or purchased by Us, are still reserved to the said Indians as aforesaid, forthwith to remove themselves from such Settlements.
All Euro-Americans who lived west of the divide would have to abandon their land and move east of the divide. They would not be compensated for their lost land. The proclamation explains the reason that the king had decided not to compensate the people who had lost the western lands:
He had reviewed the documents and discussed the issue with his agents that dealt with the American natives and determined that they had not really sold any of the land at all. They had been tricked into putting ‘X’ marks on pieces of paper that said things that were entirely different than they were told they said. The land had been stolen from them, so the thieves would not be compensated:
And whereas great Frauds and Abuses have been committed in purchasing Lands of the Indians, to the great Prejudice of our Interests and to the great Dissatisfaction of the said Indians: In order, therefore, to prevent such Irregularities for the future, and to the end that the Indians may be convinced of our Justice and determined Resolution to remove all reasonable Cause of Discontent, We do, with the Advice of our Privy Council strictly enjoin and require that no private Person do presume to make any purchase from the said Indians of any Lands reserved to the said Indians, within those parts of our Colonies where, We have thought proper to allow Settlement: but that, if at any Time any of the Said Indians should be inclined to dispose of the said Lands, the same shall be Purchased only for Us, in our Name, at some public Meeting or Assembly of the said Indians, to be held for that Purpose by the Governor or Commander in Chief of our Colony respectively within which they shall lie: and in case they shall lie within the limits of any Proprietary Government, they shall be purchased only for the Use and in the name of such Proprietaries, conformable to such Directions and Instructions as We or they shall think proper to give for that Purpose: And we do, by the Advice of our Privy Council, declare and enjoin, that the Trade with the said Indians shall be free and open to all our Subjects whatever, provided that every Person who may incline to Trade with the said Indians do take out a Licence for carrying on such Trade from the Governor or Commander in Chief of any of our Colonies respectively where such Person shall reside, and also give Security to observe such Regulations as We shall at any Time think fit, by ourselves or by our Commissaries to be appointed for this Purpose, to direct and appoint for the Benefit of the said Trade:
And we do hereby authorize, enjoin, and require the Governors and Commanders in Chief of all our Colonies respectively, as well those under Our immediate Government as those under the Government and Direction of Proprietaries, to grant such Licences without Fee or Reward, taking especial Care to insert therein a Condition, that such Licence shall be void, and the Security forfeited in case the Person to whom the same is granted shall refuse or neglect to observe such Regulations as We shall think proper to prescribe as aforesaid.
And we do further expressly conjoin and require all Officers whatever, as well Military as those Employed in the Management and Direction of Indian Affairs, within the Territories reserved as aforesaid for the use of the said Indians, to seize and apprehend all Persons whatever, who standing charged with Treason, Misprisions of Treason, Murders, or other Felonies or Misdemeanors, shall fly from Justice and take Refuge in the said Territory, and to send them under a proper guard to the Colony where the Crime was committed of which they, stand accused, in order to take their Trial for the same.
Given at our Court at St. James’s the 7th Day of October 1763, in the Third Year of our Reign.
George Washington had personally surveyed most of corporate lands in western Pennsylvania.
Under the new law, if he even went back there without written permission of the inhabitants, he could be arrested for treason and hanged. The shareholders of the Ohio Company had put up millions of dollars (in current money equivalent) to develop the land. If they even went back there to try to visit what had been ‘their’ land again, they could be arrested and hanged.
In fact, all of the people who thought they had comfortable lifestyles that would continue indefinitely could see their lives crashing down around them. They would not only have to give up their slaves and money, they would have to give up their ways of life.
The Independence Movement
Certain very powerful people in America wouldn’t be able to continue to live as they had before if the provisions of the Proclamation of 1763 went into effect. The act was particular onerous for people that took advantage of slave labor or who bought and sold human beings as slaves for profits, for the owners of large plantations (who were the only ones with rights to participate in the upper houses of governments), people who had invested in the corporations that were trying to develop land on the west side of the Appalachian divide, and people who had used trickery and deceit to get American natives to put X marks on documents (which, in the presence of a notary, constitutes a signature) which the Euro-Americans now claimed made the Euro-Americans ‘owners’ of this land.
A very few people (George Washington, for example, and the heir to the Jefferson fortune and Thomas Jefferson) were in all of these categories.
If they allowed the proclamation went into effect, their lives would be changed forever.
They couldn’t fight the law, at least not as long as they were British subjects:
Great Britain was a monarchy. The king could do anything that was not prohibited by the Magna Carta and other fundamental laws of England. The king had full authority to issue this proclamation. The proclamation did not conflict with any terms of the Magna Carta or any other fundamental laws of England.
The people who would be affected by this law could only keep their lifestyles one way: they would have to take over the government and declare the lands in America were independent country, not subject to any rulings of England, including the Proclamation of 1763.
If they could do this, they could make any rules they wanted. They could keep using slave labor, and continue to buy and sell slaves for profit. The owners of plantations and other large parcels of land could keep their control over the governments. They could continue to trick and deceive the native people, take their land, and drive them further west. (In fact, they could and did demote these people to sub-human status in their key documents, allowing them to do anything they wanted to anyone in these races, with no repercussions on them whatever.) Acting through corporations, they could continue to use land for any purpose whatever, no matter how destructive: The corporate leaders would be the new government of the new nation; this would allow them to use their police to arrest and use their jails to hold people who even tried to stop corporate abuses.
Is War Practical?
They began to bring in military analysts to see if they might possibly be able to make this work. The excerpt below is taken from a book that analyzed documents of the era to determine troop strengths, and gives estimates of troop strength that would have been available to analysts of the late 1760s and early 1700s:
The total global land forces of Great Britain exclusive of militia numbered on paper 48,647 men, of which 39,294 were infantry; 6,869 cavalry; and 2,484 artillery. These troops were unequally divided between two separate military establishments, the English establishment and the Irish establishment.
The English establishment comprised 25,871 infantry organized into 46 regiments and 20 independent companies; 4,151 cavalry organized into 16 regiments; and 2,256 artillerymen organized into one regiment of 4 battalions. Of the aforesaid infantry one regiment of 482 men (the 41st) and the 20 independent companies of 1,040 were largely non-effective, being composed of ‘invalids’ 2 doing garrison duty in Great Britain and the Scilly Islands.
An examination of the location of the British army reveals the fact that while small detachments of it were to be found in many distant quarters of the globe, the bulk of it was distributed unequally among three different countries. There were roughly speaking 15,000 men in England, 12,000 in Ireland, and 8,000 in America. The remaining 10,000 were distributed among the West Indies, Africa, Minorca, Gibraltar, and Scotland. ( to full text of original document.)
These numbers tell a very interesting story:
The British government really didn’t have any substantial forces in America.
This makes sense: prior to the war with France, the corporate militias had taken care of defense. (America was not British soil under the law; the corporations and proprietors had to raise their own militaries and defend themselves). Until war with France, the militias had been able to handle to handle threats and England was not involved in the defense of the American lands prior to 1756. The war between France had England had mostly been fought in Canada, not the British corporate lands, so no substantial troops had been stationed there.
If we divide the square miles of land that England had gained in the treaty of 1763 by the total manpower of the British military in America as of 1770, we get one soldier for every 187 square miles of land. This means that if the soldiers were evenly spaced across the American land England had gained in the war, each soldier would be 187 miles from the nearest other soldier. This is hardly enough troops to defend the land. To put this into perspective, consider that the city of New York alone has more than 50,000 police personnel (more than the total global British military force as of 1700). Imagine if 1/7th of the police force of New York City had to protect all land east of the Mississippi from wealthy local landowners and businesspeople who had raised armies with their own money, in an attempt to take it away.
From the events that followed, we can tell that the people who eventually made the war happen, and won it, had full knowledge of the British potential to defend this land.
It couldn’t be done.
They would have realized that someone was going to take this land from England.
If someone was going to take it, why not them?
Manpower of the British
The British started out with almost no forces in America; as we have noted, the force of only 8,000 men. A great many colonists joined the British cause. After the ‘destruction of the tea’ (renamed the ‘Boston Tea Party’ sometime in the 1800s, to make it sound better to children) a great many people in the colonies considered the separatists to be radical terrorists. (The ‘destruction of the tea’ was a violent act where armed vandals subdued guards by force and destroyed property that the people wanted and were willing to pay for.)
The ‘destruction of the tea’ was the first of a great many violent acts, including many that resulted in deaths over the next few years. A great many people understood what the king was trying to do, and what the sepratists were trying to do, and supported the king. The 2012 book, points out that the British military formed a total of 175 regiments with colonists who enlisted voluntarily to fight the separatists. (People who supported the kings government were called ‘loyalists’ or ‘Tories.’) We only have detailed enlistment records for 50 of these ‘Tory’ regiments, which we know had a total of just over 50,000 people in them; if the other 75 were about the same, the total loyalist enlistments would have been about 125,000. To be conservative, however, the book estimates low and claims that only 100,000 loyalists enlisted.
Of these 100,000, about 20,000 were freed slaves.
Before the war, all of the states were slave states, and slave labor was used extensively in both the north and the south. However, the British military was able to control a large portion of the northern areas. Slavery was not legal in England and, as soon as land came under the control of England, all slaves in that area were freed. Those who qualified for military service were allowed to enlist and serve alongside of other Tories.
The British government was also very clear about the status and rights of American natives: Under British law, they were considered to be human beings, with full human rights. Under the Proclamation of 1763, they would have full self government and protection by the British Crown from any unwanted incursions by the colonists.
The natives became very loyal allies to the British, both in the War of Independence and the next war (the attempt by the United States to conquer Canada in 1812).
The American natives fought with incredible valor for the British. In fact, by the time was over, leading colonialists were openly advocating dealing with the ‘Indian problem’ by using extreme means, including some of the methods that ultimately wound up being used (genocide). The letter to the right, written by Thomas Jefferson, is a sample.
At the beginning of the war, the British simply didn’t have enough forces to deal with the insurrection in the colonies. As noted above, the royal family had very close relations with the Prussian royal family (they were all basically the same family) and king George prevailed on the Prussians to allow him to use about 30,000 troops until local recruiters were able to raise Tory regiments.
Altogether, about 138,000 military personell participated in the American theater of this war during the fighting, which lasted from 1775 to 1781. (This war also grew significantly, turning into the Anglo French War of 1778 when the French entered, and eventually becoming a multi national conflict involving Spain, Portugal, and Holland. It had many theaters of war, as you will see below.)
Manpower of the Separatists
We have very little reliable information about the size of the continental army. The records are claimed to have been lost in a fire in the War Department in 1800. The only actual physical military records that appear to have survived are the war bounty records, which the United States government sold to the Ancestry Corporation in 2015. Ancestry has digitized these records and made them available for subscribers to their website. (Here is a to the Ancestry website. Sorry, they make you pay just to look at the records.) Their site says that they have records of 14,220 separate land grants issued.
Although I have not yet found an estimate that lists a reference I could check, I have found a great many estimates on many websites. These estimates are all basically the same and all include words to the effect that ‘the Continental Army never had more than 17,000 members.’
We don’t know how many of these people were colonials and how many were foreigners, attracted to the military by the very generous offers that the separatists made of free land to anyone in the military of any nation who deserted from their post and moved to America to fight for them. Here is the text of the bill that the Continental Congress passed to make these land offers:
This Congress will give, to all of the said foreign officers as shall leave the armies of his Britannic majesty in America, and chuse to become citizens of these states, unappropriated lands, in the following quantities and proportions, to them and their heirs in absolute dominion; to wit, to a colonel, 1,000 Acres; to a lieutenant colonel, 800 Acres; to a major, 600 Acres; to a captain, 400 Acres; to a lieutenant, 300 Acres; to an ensign, 200 Acres; to every non-commissioned officer, 100 Acres, and to every other officer or person employed in the said foreign corps, and whose office or employment is not here specifically named, in the like proportion to their rank or pay in the said corps; and, moreover, that where any officers shall bring with them a number of the said foreign soldiers, this Congress, besides the lands before promised to the said officers and soldiers, will give to such officers further rewards, proportioned to the numbers they shall bring over, and suited to the nature of their wanes.
It seems likely that a large percentage of the Colonial Army were foreign mercenaries who had been offered free land if they fought for the separatists and they won. (Some of the most famous of Washington’s confederates are described in the text box to the right.) However, even if all of the people in the continental army were rebels, there still would have had to have been at least 5 times more colonials fighting against the rebels than fought for them.
The great bulk of the fighting force that did battle in the American theater came from France. France had lost a great deal of territory in the Seven Years War (described in the last chapter). The colonials sent Ben Franklin to talk to King Louis XVII. Franklin negotiated two treaties with France, one called the and another treaty called the . Both were signed on February 6, 1778.
The first treaty basically was an agreement between France and the separatists to split the land conquered from England. The treaty, which you can read from the link above, goes into great detail about the exact areas that would have to be returned to France after the war, if the separatists won. (The war bankrupted Louis XVII’s government, and it was overthrown in 1795. As a result, it was in no position to use force to recover the land and, in response to Washington’s recommendation, the Congress repudiated its obligations under the contract in 1798, and kept the land it had promised to return to France.)
The second treaty involved a massive loan for trade and commerce. The loan amount, by the end of the war, was for 1.3 billion livres, which works out to be about $4 billion in current United States money. This loan was used to buy tools of war and supplies for troops.
France supplied 34,000 men to the American theater of war, by far the largest force on the war at roughly two times the size of the Continental army. France also supplied large amounts of arms, including 63 warships.
On April 12, 1778, Spain signed the with France. This obligated Spain to support France in its war effort. Although the Spanish military did not coordinate with Washington (as the French military did) they had a significant impact on the outcome, capturing all ports in the Gulf of Mexico from the British (notably , , , , and Pensacola, and ultimately conquering so much of Florida that England was not able to use it as a supply post for the latter half of the war). About 5,000 Spanish troops were involved in the American theater of war.
In December of 1780, Holland took advantage of the weakness of England and declared war. Although Dutch forces never fought on American soil, they were the second nation to grant official recognition to the Separatists government (second to France) and having another country fighting England drew significant troops that would have been available to use in America.
The War (Short Version)
In the summer of 1776, the British government sent 32,000 men under General Howe to take control of strategically important land in America.
On June 30, Howe’s troops landed on Long Island, New York. The Continental Army was in Brooklyn at the time. Washington attempted to prevent the landing without success. The British moved in to Brooklyn on August 30, forcing Washington into Manhattan. Howe’s assault on the Continental Army in Manhattan began on September 15 and he had removed the Continental army from Manhattan by September 20. (See sidebar for more information.)
At this point, Howe split his forces, with half pushing Washington to the east across New Jersey, and the other half moving northward to Connecticut and Rhode Island. The northern units didn’t encounter any significant resistance and kept Connecticut and Rhode Island out of separatist hands (along with New York City and Long Island) for the duration of the war.
Washington crossed the Delaware into Pennsylvania on December 7. He was in retreat at the time. Howe had stretched his troops thin, however, in the rapid chase. On Christmas Day of 1776, Washington came back across the Delaware river into New Jersey in the middle of the night with a small group, which managed to take control of a defensible position in New Jersey. (This is the famous crossing that children are told about in history books.) He and his troops spent the rest of the winter in New Jersey.
By 1777 England had enlisted enough loyalists to form a 6,000 man army in the north. They put General John Burgoyne in charge. This army of 6,000 left Quebec and advanced steadily to Saratoga New York, intending to push through and merge with Howe’s troops in New York City, creating a line that would prevent supplies from getting to the rebel armies from Yankee-held Massachusetts. A Yankee army of 8,000 men under general Benedict Arnold engaged and defeated the British general, who surrendered his entire force to Arnold on October 17, 1777.
Howe had been push Washington back steadily all spring and summer. By late fall, Washington had fallen back to the rather remote town of Valley Forge, where they wintered. Howe decided that he would rather spend the winter in a city, and went all the way back to Philadelphia for his winter.
The winter of 1777-1778 was tough one for the continental army. The market value of the military script Washington was using, the Continental Dollar, had collapsed and merchants were no longer accepting it. Washington couldn’t buy food, clothes, fuel, or other supplies. At the start of the winter, his army had 10,000 men. By the end, 60% had either deserted or perished, and his army was down to 4,000 men. This small group was devastated by disease and hunger, and short on supplies. To all accounts, the war was over, the rebels had lost, and all that was left was the mopping up.
Then a miracle happened. (Two miracles actually.)
The Invasion of England
France had lost an enormous amount of territory in the Seven Year’s War. Washington had sent Ben Franklin to France to negotiate with Louis XVII for support: If France would declare war against England and send help to the rebels, they would split the land after the war, with France getting back whatever portion of the land it lost that had been reconquered. On February 6, 1778, Louis XVII declared war on England. France had rebuilt its navy (a large part of which was lost in the Seven Year’s War) and moved in to the relatively undefended Caribbean, attacking and taking Dominica, Grenada, Saint Vincent, Montserrat, Tobago, and St. Kitts from the British. The Caribbean islands, collectively called the ‘West Indies’ produced far more revenue for the British government than the North American coast, so the government considered it a priority to save what could be saved of these islands. The British military was forced to pull a large portion of its force out of America to defend its Caribbean holdings.
The second miracle was a replacement of the command in the British Army. General Howe and his top officers were charged with dereliction of duty for their notorious partying in Philadelphia, when they should have been attacking Washington’s defenseless army in Valley Forge. After the command was removed, the army did nothing for several weeks. On May 24, General Clinton assumed command. Clinton received intelligence that the French planned an assault on New York City and, ignoring Washington, he moved his army back to Manhattan to defend it against the French.
On July 27, 1778, the French attacked the British fleet in the English Channel in an engagement called . As a result of the success in this battle, the French planners decided that the British were vulnerable and put together a joint attack plan with Spain to bring the war home to English soil. The attack plan was called the It involved a naval attacks to support an invasion army of 40,000 men, which would be landed on Falmouth in Cornwall, in England. The French and Spanish began to assemble the men and machinery needed for this massive attack. The British high command realized an attack was imminent, and started pulling troops out of other areas to deal with the threat to the homeland. By the end of 1780, the British troop strength in the American theater of war had fallen to only 11,000 men.
Then something strange happened. There are two possible explanations for what happened next:
The first is that the French and Spanish decided that the attack wouldn’t work and changed their minds.
The second is that the entire build-up for the attack of England had been a ruse to draw the British away from the Atlantic theater of war, so that the French and Spanish could wipe out what remained of the British fleet there. Leaving only enough ships in the Channel to keep up the illusion of an imminent attack, the French and Spanish commanders sent the majority of their fleet to the Atlantic and Gulf of Mexico. The French proceeded to have a long series of naval victories and the Spanish retook all major ports and cities on the Gulf Coast and Florida that they had lost in the Seven Year’s war. The final piece of the puzzle came into place when the French gained control of the coastal and Atlantic shipping lanes in the .
The French then landed 10,000 additional men on American soil to reinforce the 3,500 that were already there and, with the aid of Washington’s army push the remaining British troops toward the trap they had set at Yorktown, Virginia. The British commander, Cornwallis, was down to only 7,000 men at this time and couldn’t hold his own against the vastly superior combined forces (the French 13,500 men and Washington’s 5,000). He expected to meet his fleet at Yorktown Virginia, and be evacuated to New York to regroup. But when he got to Yorktown, the only ships waiting for him were French. Under bombardment from both the sea and the land, low on supplies and in an indefensible position, surrendered on October 19, 1781 to , the commander of the French army.
English troops still held most of New York city, parts of New Jersey, Connecticut and Rhode Island, but they were able to negotiate a cease fire with the continentals. The war wasn’t over formally, but the fighting in the American theater had stopped.
The Treaty of Paris
France and England continued to fight in other parts of the world. This was a massive war and was bankrupting both countries. Finally, in 1783, the three main European combatants England and France began negotiations for an end to the war. On September 3, 1783, they reached an agreement. As part of this agreement, the British had to recognize Washington’s administration and evacuate the territory they held in the area that would be known as the ‘United States.’
On November 25, 1783, the final British troops left, in compliance with the terms of the Treaty of Paris. Shortly after noon on November 25, George Washington made his reentry into New York, bringing it under the control of a new country, set up and granted land under the 18783 Treaty of Paris, called the ‘United States of America.’
A New Country is Born
The peace treaty, called the Treaty of Paris of 1783, created a new country. Here is the relevant text treaty:
The Definitive Treaty of Peace 1783
In the name of the most holy and undivided Trinity.
It having pleased the Divine Providence to dispose the hearts of the most serene and most potent Prince George the Third and of the United States of America, to forget all past misunderstandings and differences that have unhappily interrupted the good correspondence and friendship which they mutually wish to restore. And having for this desirable end already laid the foundation of peace and reconciliation we agree to a Treaty of Peace be concluded between the Crown of Great Britain and the said United States and have agreed upon and confirmed the following articles.
His Brittanic Majesty acknowledges the said United States, viz., New Hampshire, Massachusetts Bay, Rhode Island and Providence Plantations, Connecticut, New York, New Jersey, Pennsylvania, Maryland, Virginia, North Carolina, South Carolina and Georgia, to be free sovereign and independent states, that he treats with them as such, and for himself, his heirs, and successors, relinquishes all claims to the government, propriety, and territorial rights of the same and every part thereof.
And that all disputes which might arise in future on the subject of the boundaries of the said United States may be prevented, it is hereby agreed and declared, that the following are and shall be their boundaries, viz.; from the northwest angle of Nova Scotia, viz., that angle which is formed by a line drawn due north from the source of St. Croix River to the highlands; along the said (and then continues to define all land east of the Mississippi river and south of the Great Lakes as belonging to the United States)
Note that the treaty gave much more land to the United States than just the colonies; it gave them all land south of the Great Lakes and west of the Mississippi.
The same people who had opposed the proclamation of 1763 took over the government. These people, including Washington, Jefferson, Hamilton, and Adams, had several very important reasons to protect corporate rights:
First, they wanted to protect their own self-interests. As we have seen, the people who led the colonies to war and won the war were extremely rich investors, deeply involved in corporations themselves. They were in a position to increase their corporate rights and the rights of corporations they used to make themselves even richer and they wanted to take advantage of it. Many of them had personal experiences where they lost money due to the restrictions corporations faced under British law. If they were forming a new country, they could make sure it did not have these restrictions.
Second, they knew that the corporations made the rules and decided what happened in the colonies. In corporations, boards of directors make the decisions and shareholders elect the directors. Most of the shareholders who owned the corporations in America didn’t actually live in America. Most lived in Holland (home of the largest stock market that existed at that time), Germany, England, France, and other nations in Europe.
Washington, Jefferson (Thomas, who had inherited Monticello when Peter died) Adams, and others knew that the war of independence was only the first of many wars the new nation would be involved in. (The next war, called the started immediately after Washington took power. It was a popular revolt against the new government for the enormous tax burden it had imposed on the people as soon as the government met. After that, war has been virtually continuous.)
They wanted corporations to move to America and start doing business right away. They knew there would be additional wars. (War started right away, when the people of the colonies rose up in opposition to the new government in the war has been more or less continuous since then.) In wars, people need guns and gunpowder. Gunpowder factors are extremely dangerous; they can blow up killing many people and destroying massive amounts of property. People considering building gunpowder factories (for example, the French industrialist EI DuPont) are very worried about personal liability for damages that may rise if the factory explodes. America can attract gunpowder factories by making it clear that corporate owners would not be liable for either criminal or civil suits if their factory should blow up.
Creation of A Corporate Paradise
Here are some of the rights that corporations gained in the new nation, that they hadn’t had before:
Before the United States, corporate charters were only granted for a period of time. As the end of the charter period approached, the shareholders would have to petition the government for renewal of their charters.
At renewal time, the government could change the terms of the agreement if they wanted to. In fact, it was common for governments to reduce rights of corporations at renewal time. One example that makes this clear involves the largest British corporation, the British East India Company. The company’s first charter, granted on December 31, 1600, had a term of 15-year term. The British parliament renewed it in 1615, but required the company to pay higher percentages of its profits to the government in the renewal than in the original charter. The government renewed the charter over and over, but each time transferred some of the rights that had belonged to the corporation to the British government. In the renewal of 1783, the company lost the right to govern the nation of India (which the corporation had conquered and governed independently of the government of England to that date). In the renewal of 1813, the company lost its monopoly on trade with India and China, and had to accept competition with other companies. By 1873, there was nothing left of the East India Company, and the British parliament passed thewhich dissolved the company.
In the United States, people don’t submit their charters to any agency for approval. No government has any authority to alter the terms of corporate charters. People write their charters themselves and then simply register them with the corporate commissions.
Who decides how long the corporate charter will last? The people who write the charter. If they want it to last forever, they merely have to state this in the charter and it will.
Forever rights mean that corporations can build facilities that they would not have been able to justify if they had limited terms. If it takes a century for the profits of a factory to recover the cost of a factory, this is no problem: the corporation will be around. Forever rights means that corporations can accumulate wealth forever. They can keep growing and growing, increasing their economies of scale, taking over smaller businesses that don’t have the economy of scale advantages, gaining market share, year after year, decade after decade, century after century.
Forever rights also have important political implications: If companies have no ending dates, they can justify building massive political lobbies to manipulate legislation, they can invest in media to mode public opinion for their benefit, and they can form truly massive ‘political action committees’ to manipulate elections. No matter what it costs to make sure the government and people are on their side, they can spend it.
In the United States, corporations have rights. These rights are protected under the constitution. Not the parts of the constitution that were added later (the amendments, which were designed to protect human rights) but the body of the constitution, Article 1 to be exact.
Laws protecting ownership of property rights in England protected ‘private persons’ or ‘Englishmen’ or ‘individuals’ that owned. (The 1765 book is considered the authority on British land law; it goes over the issue in great detail.) The framers of the United States constitution would deal with property rights differently: rather than saying that certain groups (say ‘private persons’) will have rights, they decided to frame the rights as limitations of the power of governments. Governments would be prohibited from interfering in tractions.
This means that it doesn’t matter if the transactions are between ‘private persons’ or corporations. The exact words are:
Article 1, Section. 10.
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
Lawyers know how to make their statements confusing, so that people who would probably object to the terms if they really understood them will not be able to understand them enough to realize how offensive they are. At first glance, all of Section 10 appears to be incompressible gibberish. If you break it down, however, you can see it is actually 9 separate rulings and it is easy to see that, although most of them are gibberish, one of them is a critical ruling that has dramatic effects on the rights of corporations and which the supreme court has ruled (in ) means that the framers of the constitution intended corporations to be persons under the law, with the same rights as human persons:
Article 1, Section. 10.
Paragraph 8: 1) No State shall pass any Law impairing the Obligation of Contracts.
Sentence 8 doesn’t say ‘people have the right to make contracts.’ It says that states must take themselves out of the picture. They don’t even have the right to consider differences between contracts made by corporations and by individuals. They must treat all contracts the same, and not involve themselves.
After the constitution was written, the delegates to the Constitutional Convention realized this document didn’t actually protect the people in any way (they had clearly cared much more about the rights of corporations to put any protections for people in the body of the document), so they added a group of amendments that granted certain rights to human persons.
Because of the way the constitution itself was written, the Supreme Court has ruled that all of the rights granted to human persons in the amendments also applied to corporate persons.
Rights to Bribe Government Officials
Two years after the constitution was passed, the first amendment that changed it was passed. This amendment said:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.
This does not say ‘Congress shall make no law abridging right of people to say what they want.’ It says ‘Congress shall make no law abridging the freedom of speech.’ It doesn’t specify who the ‘speaker’ is. The ‘speaker’ may be a human person or a corporate person; the protection applies equally to all entities the constitution recognizes as existing.
In some countries, paying for votes is called ‘bribery’ and is illegal. This is technically true in the United States as well. But as long as the payment is not specifically tied to an action of the public official, it is not considered to be bribery, it is considered to be ‘free speech.’
Here is an example that will help you see the difference between bribery and free speech: If you tell a legislator you will give her $1 million for a vote, and she explicitly agrees to sell her vote to you, and you give her the money and have her agree to a contract selling her vote (either orally or in writing), then you give her the $1 million and she votes as agreed, this is called bribery. It is illegal.
However, if any of these conditions is not met, it is not considered bribery, it is considered free speech. For example, if you want to buy a vote without violating the law, you can tell her you are thinking about giving her $1 million as a ‘no strings attached’ gift. However, you need to make sure that she is ‘friendly to your cause’ before you can justify this ‘no strings attached gift.’ You can say that you will be watching her, particularly on the date of the vote, to see if she is ‘friendly.’ If she is, she will get the $1 million; of not, she won’t. (Don’t mention the vote at all in any written correspondence; you are only paying for ‘friendliness,’ not the vote, and it is not illegal to buy friends.) Then, she votes for your cause (perhaps because she wants to be your ‘friend’ so she can get the ‘no strings attached gift’).
Everything happened the same way, but as long as you are careful what you say, you have not broken any laws. At least this is true in the United States. (This would still be bribery and illegal in most other countries.) In fact, it is not just legal. The government has no authority to pass any law against it.
While this right applies to everyone in theory, in practice only corporations can do it effectively.
If you want, you can call your legislator and tell her how you would like her to vote. You may even tell her that you will make a contribution to her if she is friendly to your cause, as described above. But if you are asking them to vote against a law that would benefit corporations, you can expect organized professional lobbyists to be using their freedom of speech to persuade the legislator to vote the other way. Your speech going to be more effective if you can put more money behind it. If you want to sway the legislation, you will have to put more money behind your speech than the corporations that favor it, and you will have to be more eloquent than the professional lobbyists. In practice, unless you are a very big political contributor (contributing more than the corporations), chances are you won’t even be able to see the legislator to explain your cause. (The legislator will, of course, have plenty of time to attend the magician parties the lobbies have.)
Corporations know exactly what legislation they want. They can afford to pay their attorneys to write it. They can then tell their ‘friends’ in government that they are figuring out who to give money to, and let them know how grateful they would be if they introduced these bills. They can then tell other government officials how grateful they would be if they voted for these bills. Using these tools, corporations can pass any legislation they want. If they want to do something unpopular, say increase subsidies on burning coal, they can create deceptive names like ‘clean air act’ or ‘clear skies initiative,’ and hide the actual effects of the law in thousands of pages of jargon that no real person could read and remain sane.
Selecting Who Gets Into Government
Corporate persons have the right to support the candidates for government office that they want, just like human persons. Again, however, human persons can’t put together nearly as much money to support candidates as corporate persons.
The 2007 paper ‘Executive Summary: Does Money Buy Elections?’ analyzes the relationship between spending and election results. The paper’s findings:
Threshold Effects of Campaign Spending
Non-incumbent candidates require a spending threshold of between $0.7-$1 million in order to credibly compete. Incumbents enjoy an inherently competitive position and choose a similar minimum spending level when faced with a serious challenger. Less than 1% of challengers and 5% of open seat candidates spending $700,000 or less won election. • More than 45% of non-incumbents with spending of $700,000 or more won election. ( to source)
Logic tells us that money buys elections. The study confirms this. In the United States, money=speech. Corporate persons can come up with far more money than human persons, so they can speak louder and more forcefully than human persons. In the United States, the government is prohibited from interfering in this; this prohibition includes a prohibition against putting limits on the amounts that can be given to people to get them elected, or given to political action committees (PACs) that create negative ads to prevent people from getting elected.
End of Personal Liability
The founders of the United States wanted even more rights than this for corporations and corporate owners. When governments drew up corporate charters, the governments set the limits of responsibility for the owners.
If they wanted, they could make the owners responsible for certain acts of the corporation. If you invest in a company, you are a part owner. If owners are responsible, and the company does something horrible, you may be personally responsible and lose everything.
The people who created the new nation were corporate owners. Their companies did very dangerous and destructive things. They didn’t want to have to worry about potentially being liable for something their companies did.
In the new nation, governments wouldn’t write corporate charters, the people who formed corporations would write them. If they wanted, they could write charters that exposed the owners to liability for acts of the corporation.
But the people who formed corporations didn’t want this, so they didn’t include these provisions in their charters. If the charters don’t say they are liable, they aren’t liable. The corporations can do anything they want. No matter who they harm, the damages can never pass through to the owners of the company.
Here is an example so you can see how profound this difference is from the earlier corporate rules:
The Consolidated Edison Corporation owns two nuclear power plants , about 38 miles north of Manhattan. A 1957 government report known as WASH 740 (‘Theoretical Possibilities and Consequences of Major Accidents in Large Nuclear Power Plants’) showed that a worst-case accident at such a plant would ‘permanently destroy an area the size of the State of Pennsylvania.’ In the event of such an accident, the entirety of New York City and Long Island, most of New Jersey and Connecticut, and large parts of the states of New York, Pennsylvania, and Massachusetts would be rendered permanently uninhabitable. This would obviously cause trillions of dollars in losses. How much of these losses would come out of the pockets of the owners of Consolidated Edison?
This is they way the corporate system in the United States is designed to work. The people who set it up had immense amounts of corporate wealth to protect. They set up a system that was as close to a paradise as possible for persons who were lucky enough to be born as corporate persons, rather than the lowly and inferior human persons.
On January 21 of 1785, representatives of the Government of the United States of America announced they had ‘purchased’ of all land in the southern and eastern parts of the Ohio River valley from the American natives under an agreement called the
The boundary line between the United States and the Wiandot and Delaware nations, shall begin at the mouth of the river Cayahoga, and run thence up the said river to the portage between that and the Tuscarawas branch of Meskingum; then down the said branch to the forks at the crossing place above Fort Lawrence; then westerly to the portage of the Big Miami, which runs into the Ohio, at the mouth of which branch the fort stood which was taken by the French in one thousand seven hundred and fifty-two; then along the said portage to the Great Miami or Ome river, and down the south-east side of the same to its mouth; thence along the south shore of lake Erie, to the mouth of Cayahoga where it began.
The Indians who sign this treaty, as well in behalf of all their tribes as of themselves, do acknowledge the lands east, south and west of the lines described in the third article, so far as the said Indians formerly claimed the same, to belong to the United States; and none of their tribes shall presume to settle upon the same, or any part of it.
The post of Detroit, with a district beginning at the mouth of the river Rosine, on the west end of lake Erie, and running west six miles up the southern bank of the said river, thence northerly and always six miles west of the strait, till it strikes the lake St. Clair, shall be also reserved to the sole use of the United States.
In the same manner the post of Michillimachenac with its dependencies, and twelve miles square about the same, shall be reserved to the use of the United States.
How much did the United States government give to induce these people to give up the homes their people had lived in for 10,000 years, their farms, their grazing grounds, their rivers, lakes and streams? Did they give so much money that the people would abandon the graves of their ancestors, their sacred sites, and their source of food, shelter, and everything they needed? Did the United States government provide an even better place for these people to live, pay to have new homes built for them, and pay to replace everything they lost? For these people to give up so much, the government must have made them a truly incredible offer. Article 10 of the purchase agreement specifies what they got in return:
The Commissioners of the United States, in pursuance of the humane and liberal views of Congress, upon this treaty’s being signed, will direct goods to be distributed among the different tribes for their use and comfort.
The American natives would get whatever goods the humane and liberal members of Congress should choose to give them. Even the most cursory look at this agreement—and the other many agreements that followed—indicates it was not a good-faith ‘sale’ of land between a willing and informed seller and the government that ended up with the land. It seems impossible to claim that this is anything other than one of the ‘many Frauds and Abuses have been committed in purchasing Lands of the Indians’ that had so offended the idealistic young George III that he had done what he could to try to prevent it. Now, the United States government began to ‘buy’ immense amounts of land from the American natives, on similar terms: the people would give up their homes, their gardens, their farms, their fields, their common buildings, and everything they had (including, in many cases, their lives). In return, they got whatever the Congress later decided to give them.
What Happened to the Land?
In this initial ‘purchase’ of land, the United States government obtained 20,312 square miles of land (each square mile of land was called a ‘section’ in the ). The original Continental Congress had promised soldiers bounties, payable in land, as described The Congress needed 252 square miles to fulfill the terms of these bounty agreements. The new Congress distributed 252 square miles of this land to fulfill the original bounty agreements.
What happened to the other 20,060 square miles?
Between October of 1787 and July of 1788, the new Government of the United States of America sold 10,593 square miles of the land it had purchased (a total of 6,780,000 acres) to a company called ‘’ and its wholly owned subsidiary . The company was run by four top military officials: (all of whom had been placed into positions of authority due to the direct intervention of George Washington). These people each put up a small amount of money and collectively owned a tiny share in the company. The great majority of the funding came from a group of investors who wished to remain anonymous. They were represented by the assistant treasury secretary, . The proposal to sell this enormous amount of land in Ohio to the Ohio Company (the same name as Washington’s original company) came with the highest possible recommendations: President Washington personally bought the bill to the floor of the Congress and lobbied for its approval. Although the investors were anonymous and we can’t really know who was involved, Washington’s personal involvement in this affair seems to indicate he may have known at least one of them extremely well.
All of the documents of the Ohio Company of Associates are now in the library of the University of Ohio at Marietta. Here is a to a document with a list of links to scans of the original documents. Here is a quick summary of the corporation’s activities:
The first act of the corporation was the formation of the town of Marietta Ohio, which was to be its corporate headquarters. Corporate resolutions authorized the layout of the streets, public areas, and dictated the lot sizes to be subdivided and sold in markets. Most of the current towns and cities in Ohio were organized, surveyed, and sold, by the Ohio Company of Associates, the ScotIio Companies, or other subsidiaries and associates of the Ohio Company of Associates. These companies were able to purchase immense quantities of land that was sold by the United States government after the government ‘bought’ this land from the American natives, in agreements similar to the described above. The amount that the anonymous investors paid for this land is not listed on the agreements; we also don’t know if they paid with real money (silver or gold) or with the political script that was basically worthless at the end of the war (the ).
The Ohio Company of Associates went on to form additional subsidiaries that eventually were able to buy, subdivide, and sell most of the land in the current states of Indiana, Illinois, and Michigan. With the personal assistance of the President of the United States, the (anonymous) investors who formed these companies wound up getting all of the land that Washington had once thought was his birthright, as the heir to his shares of the Ohio Company of Virginia. Whoever these people were, they were very lucky to have friends in such high places to get them this land.
In 1794, a group of speculators and politicians formed four separate corporations in the state of Georgia: the Georgia Company, the Georgia-Mississippi Company, the Upper Mississippi Company, and the New Tennessee Company. The speculators held secret negotiations with members of the Georgia legislature and the Governor to purchase 40 million acres to the west of the Georgia state line for the sum of $500,000.
The lands that the speculators wanted to buy were part of the Yazoo River Indian Reserves.
A great many people thought the sale was wrong for a great many reasons.
Some felt that the state of Georgia should honor its agreement with the American natives and not have the right to sell their land. Others disapproved because the land sale was held in secret and not subject to legislative review as the law required. Others disapproved because of the price: the land was sold for a tiny fraction of the price it would have brought in a market sale. Others disapproved because it smelled of corruption: they alleged (and it was later proved) that the people who signed the documents agreeing to the sale had all been bribed. Others pointed to a large number of laws, some dating from before the war and some after it, that had been violated from this sale.
At the time, was running for governor of Georgia. He decided to make the Yazoo scandal the focal point of his campaign. He promised that, if elected, he would work through the legislature to nullify the sale, give the corporations their money back and force them to relinquish title to the land. He was elected and kept his promise: On February 13, 1796, he signed a law that nullified the land sales, and returned the money to the corporations.
The corporations refused to accept the money. They claimed that the sale was final and there is nothing the state could do about it. Eventually, a case about the issue went to the Supreme Court. In this case, , the court ruled that the land sale could not be nullified. It didn’t matter what the people of Georgia wanted. It didn’t matter that the sale was illegal and that the seller of the land didn’t own it. It didn’t matter that Indians had been promised this land (the Supreme Court ruled that ‘Indian title to land is not of the same character as white land titles;’ and then simply ignored it). It didn’t matter that the sale people buying the land had been convicted of bribing government officials to get the sale through. The constitution protected contracts, the contract existed, the state had no right to interfere. The government protected the corporation over the rights of the people.
This ruling set several important precedents that have determined important parts of law in the United States.
One involved native claims to land. The Georgia legislature did not own the land it sold. The land had been granted to American natives for all time. If the court had ruled to allow the nullification, the land would have been restored to the natives.
In his arguments rejecting the nullification, Justice Marshal wrote the majority opinion. Here are his remarks regarding the rights of the Indians:
It was doubted whether a State can be seised in fee of lands subject to the Indians title, and whether a decision that they were seised in fee might not be construed to amount to a decision that their grantee might maintain an ejectment for them notwithstanding that title. The majority of the Court is of opinion that the nature of the Indians title, which is certainly to be respected by all courts until it be legitimately extinguished, is not such as to be absolutely repugnant to a seisin in fee [meaning an absolute seizure; this is from feudal law and refers to the right of a king to seize property without compensation or cause] on the part of the State.
Although this appears to be gibberish, if we eliminate the superfluous words, we get something that makes sense:
The Court is of opinion that the nature of the Indians title is not absolutely repugnant to an absolute seizure on the part of the State.
If we remove the double negative, the message becomes obvious:
The Court is of opinion that it is OK to seize land that has been reserved for any of the races that are lumped together under the term ‘Indians.’
If officials of a state government wanted to simply take the land that had been reserved forever for Indians under legal contracts (the peace treaties), without even bothering to come up with excuses or pretending to give compensation (conduct a ‘seisin in fee’), they had this right.
The second important precedent involved the use of fraud in contracts. The attorneys for the state of Georgia argued that the corporation should not be able to keep the land because its negotiators had used fraud to get it. The issue of fraud was not in dispute by the time of this particular ruling, because the legislators who had signed the sale documents had already been convicted of accepting bribes in exchange for their signatures by the time the Supreme Court heard the case. The court ruled:
If a suit be brought to set aside a conveyance obtained by fraud, and the fraud be clearly proved, the conveyance will be set aside as between the parties, but the rights of third persons who are purchasers without notice for a valuable consideration cannot be disregarded. Titles, which, according to every legal test, are perfect are acquired with that confidence which is inspired by the opinion that the purchaser is safe. If there be any concealed defect, arising from the conduct of those who had held the property long before he acquired it, of which he had no notice, that concealed defect cannot be set up against him. He has paid his money for a title good at law; he is innocent, whatever may be the guilt of others, and equity will not subject him to the penalties attached to that guilt. All titles would be insecure, and the intercourse between man and man would be very seriously obstructed if this principle be overturned.
The courts ruled that the corporations that had bribed the government officials to get them to sign the document were ‘third persons.’ They had provided a ‘valuable consideration’ and their rights ‘cannot be disregarded.’ This ‘third person’ has ‘paid his money for a title good at law; he is innocent, whatever may be the guilt of others, and equity will not subject him to the penalties attached to that guilt.’ The land sale can’t be nullified just because it was the result of a ‘clearly proved’ fraud.
The third precedent here involves corporations as persons. Although this particular issue was not a part of the allegations of either party, legal scholars claim it was decided here because the buyers were corporations. Marshall (writing for the majority court decision) refers to them 6 times in the decision as ‘persons.’ The court has ruled (without being asked to do so) that corporations are ‘persons.’
There are three important points in United States law that were decided in this case:
1. Indians may have the land they live on seized without cause or compensation (a seisin in fee). There is nothing they can do to prevent this and they have no right to even be consulted before this happens.
2. Corporations are ‘persons’ under the law.
3. Corporations that obtain title to land by fraud and bribery may keep the land.
It is important to understand the importance of Supreme Court rulings in the United States legal system. Once the Supreme Court has ruled on an issue, all future court decisions MUST conform to the Supreme Court rulings. If they don’t, the losing attorneys may appeal the ruling and higher courts MUST reverse the decision to conform to the Supreme Court ruling. You may think that appeals should eventually extend all the way up to the Supreme Court, which would then have the opportunity to reconsider and revisit the case. That is not correct. The Supreme Court can only review cases on issues that have not yet been decided.
This particular issue has been decided. It cannot be changed through the judicial process.
The Corporation- Based Republic
The changes in the nature of corporations started in the new United States, but ultimately spread and are now a reality globally. There are important practical reasons for this, having to do with war:
The nation with this new kind of corporation had enormous military advantages over other nations.
The owners of corporations that made very dangerous things (like explosives) moved their corporations to the United States. The United States became the explosive capital of the world. (The owners could live in any country they wanted; their rights were the same. But the factories had to be located in the United States.)
Investors took advantage of the new rights of corporations and corporate owners to build much larger production facilities than had ever existed on the planet before. They could do this because they no longer had to worry about renewing their charters; they knew that their corporate rights had no ending date. In the old system, people didn’t know if they would have rights to keep the production of giant factories in the future, because their charters would expire. In the new system, they had forever rights: They could finance billion-dollar factories with perpetual debt and begin collecting returns the very first year, even though the factories wouldn’t actually be paid for until many decades in the future.
Small factories can’t really make some manufactured goods; the factories have to be very, very big, or the process can’t really be automated.
One obvious example here is steel. We have seen that people had already been making steel for 4,000 years before the United States even came to exist.
They had done the work by hand. People would build small kilns and stoke them with charcoal, then shovel in the iron-containing dirt. They would then stoke the fire for several days. The iron would then ‘smelt’ out of the dirt and fall to the bottom of the fire, where it would be collected into sand molds. (The molds were shaped like mother pigs nursing their babies, so the iron was called ‘pig iron.’) The iron would then go to blacksmith’s shops, where it would be hammered into steel. The entire process was very time-consuming and only a tiny amount of steel was actually made. As of the 1790s, total pig-iron production in the United States was about 20,000 tons a year. This iron was so difficult to turn into steel that the entire nation produced less than a ton of steel a year.
It is possible to automate the process, but this requires truly massive facilities. In the 1997 paper , Robert Rogers shows that the optimal steel mill size has an output of 6 million tons of steel a year. In other words, a mill of this size will have the lowest unit costs (the lowest cost per pound of steel output) of any mill. Any smaller facility will have a higher cost per pound. (Larger facilities will have the same cost per pound; as a result, if you want to produce more than 6 million tons a year, you are best to break your facilities into units capable of producing 6 million tons each.)
New corporations in America could build giant facilities. They could churn out steel by the hundred, then by the thousands, and eventually millions of tons a year. By 1867, giant corporate steel mills were churning out 19,643 tons of steel a year, roughly 20,000 times more steel than was produced in the hand-operated facilities a lifetime earlier. (In 2015, the United States steel industry produces 88 million tons a year. The industry employs 150,000 people, so output is 586 tons per year for each employee.)
As the output of steel and explosives skyrocketed, the output of weapons of war skyrocketed. One nation controlled the bulk of these new weapons: the United States. By the mid 1800s, the great majority of the world’s weapons of mass destruction were being produced in one country, the United States.
The United States had fantastic advantages over other countries in war.
In fact, other countries had to adapt or they would not exist.
They did adapt. We know this because other nations (besides the United States) still exist.
Changes Spread to Rest of World
United States Style Corporations
Corporations are tools. If people want to do anything, they can do it better if they cooperate. Corporations are organized structures that make cooperation easier, faster, more efficient, and more organized. United States style corporations are far more powerful tools than the corporations that existed before the United States became a nation.
What can we do with these new kinds of corporations?
In fact, we can do anything any group of humans wants to do.
If we want to, we can use these tools to make the world a better place. As you will see, many people have already figured this out and have created a path for solutions to the problems that the human race now faces, using these new style corporations as tools.
Most people, however, only see the bad side of corporations.
The realities of some types of societies make people want to destroy the world and create and supply wars. They work in ways that allocate the good things the world produces to people who get money, and they work in ways that distribute large amounts of money to war suppliers and resource destroyers. People will try to get these money prizes that are offered to destroyers and warmongers. They can get more prizes if they destroy more of the world or win more wars, so they look for tools that help them destroy and kill more efficiently. Corporations can help with this, so they build corporations.
This does not make corporations bad. The corporations are just tools, like hammers. If you use a hammer wrong, you can break your knuckles, causing incredible pain. The hammer is not to blame for this. The hammer is just a tool. The problem is that you used the tool the wrong way, to do harm rather than good.
As I have pointed out many times in this book so far, this is Book One of a three book set. Book Two, , is about the different kinds of societies humans can have, and the way to convert from the type of society we were born into to other societies, if we (the members of the human race) wish to do this. As you will see, not all societies reward destruction and war. In fact, there is only one type of society that really does this, a society built on the belief in sovereign (unlimited) ownability of the world.
We happened to have been born into societies built on this belief. More than 2,400 years ago, Socrates told people that there were other foundations for society: we could use logic and reason. We could examine the needs of the human race and use our intellect to figure out how to structure our societies to meet our needs. The people wanted to continue to accept their beliefs, and Socrates’ logic made this difficult, so they put Socrates to death so they didn’t have to listen to him anymore. But Plato kept his ideas alive and Alexander tried his best to turn them into reality.
Alexander showed us that it is possible to build societies on foundations other than beliefs. Although the new intellect-based society only existed a few years, the fact that it did exist tells us it is possible for other societies to exist.
We are now at a unique place in time. We are at a point where we have all of the knowledge of the past (at least all that has not been destroyed by the believers) at our disposal; for the very first time, the human race has the ability to work and cooperate to bring Socrates’ ideas to fruition, if we should decide we want to do this. If we want to do this, we will need the best tools available to make this a reality.
The purpose of Book One—Forensic History—is to try to convince as many people as possible to take this path. I want you (where ‘you’ means ‘everyone other than myself) to realize that the human race has been through a great deal more in the millions of years we have lived on this planet than the people who teach history in school would have us believe. We have done more, and this shows that we can do more, than we were led to believe. History tells us that the human race is capable of far more than we have been led to believe.