The Rich and Powerful in America could not keep the powers and wealth they had held before 1763 if the colonies remained a part of England.
They would have to break away.
Would this be possible? Let’s consider some of the things they would have considered in the early stages of the analysis:
Here is information from the British military indicating their troop strength as of the early 1770s:
The total 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. [The full text of original document can be found at https://www.americanrevolution.org/britisharmy1.php.]
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, the colonial militias had been responsible for defense of the colonies. England had sent troops in to fight the French during the war but had removed them when the war was over.
The total British military forces in America worked out to one soldier for every 187 square miles of land the nation had gained in the Treaty of Paris. This means that if the soldiers were evenly spaced across the American land that England had gained, each soldier would be 187 miles from the nearest other soldier. For perspective, consider that the current city of New York alone has more than 50,000 police personnel (more than the total global British military force as of 1770) to keep order in that one city alone; more than the total British force in all of America.
Anyone could see that the tiny British force in America could not protect the land England had gained against a professionally planned and well-executed military campaign. From the events that followed, we can tell that the people who eventually made the war happen, and won it, appeared to have figured this out not very long after the peace treaty of 1763 was signed.
Manpower of the Separatists
The people who planned war with England considered their options. England couldn’t give away the land west of the divide to attract recruits, because they had already ruled that they would protect the existing treaties with American natives and allow them to live there from then until the end of time. But the colonists didn’t have to respect these wishes. If they could defeat England in a war, they would get roughly 450,000,000 acres of additional land. They would get all land west of the divide. They could send appeals out all over Europe that they would give away free land to anyone who came to America to fight for independence.
Here is the text of the first of several land grant bills that the Continental Congress passed as soon as they began raising armies for the war, in September of 1776:
Resolved that Congress make provision for granting lands in the following proportions : to the officers and soldiers who shall so engage in the service, and continue therein to the close of the war, or until discharged by Congress, and to the representatives of such officers and soldiers as shall be slain by the enemy, such lands, to be provided by the United States, and whatever expense shall be necessary to procure such land ; the said expense shall be paid and borne by the States in the same proportions as the other expenses of the war, viz.: to a colonel, 500 acres; to a lieutenant colonel, 450; to a major, 400; to a captain, 300; to a lieutenant, 200; to an ensign, 150; each noncommissioned officer and soldier, 100.
This offer wouldn’t have been particularly attractive to locals of course. They knew that the promised land was already inhabited by large numbers of American natives.
The king had made sure the natives knew that they were to be granted rights. They realized that the colonials would not respect their rights and would try to remove them or worse if they won, so they considered the colonials to be enemies.
People in the colonies knew that, if they got this land in exchange for fighting, they would have to place their lives at risk just to go there. If they were able to survive there, they wouldn’t be able to make any money because the Ohio lands were too far from markets were money was used.
Foreigners didn’t know the details. This offer was extremely attractive to them. To understand how attractive this offer would have been to European farmers, you have to understand that conditions weren’t much different for most rural people in Europe than they had been during the Dark Ages. The people who actually worked the land were called either ‘tenant farmers,’ ‘peons,’ or ‘serfs.’ The landlords assigned these people parcels of land and quotas they had to pay as ‘rents’ on that land. If they missed the rents, their landlords would punish them, usually by execution.
The colonial separatists could attract people to fight for them by offering an alternative to this miserable existence: Europeans could come to America and fight for the separatists. If they won, they would become owners of parts of the planet. They would get a minimum of 100 acres of their own land. Remember that an acre is the amount of land needed to support one person.
They would be rich.
The separatists also needed experienced officers. They wanted these people to desert from foreign armies, preferably with their entire units. If they did this, they would get truly fantastic amounts of land. Here is the text of the appropriate legislation they passed in 1776:
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.
American history books try to make it appear that the war was a battle for freedom and liberty by ‘the colonists’ who were united in opposition to an oppressive England. The books try to make it appear that the only theater of war was in America. None of these things are true.
First, the war was not just between the separatists and England. The French Government had not been happy with the results of the Seven Years War (called the ‘French and Indian War’ in the United States) and wanted their land back in Canada. The French government had been ready and waiting for an excuse to try to take their land back. As soon as they saw that England was involved in a battle with the colonies, they attacked English positions all around the world. The Spanish government also saw the war as an opportunity. Spain declared war on England in 1779. The Dutch government saw this as an opportunity to take advantage of British occupation in a war against both of its traditional enemies; they declared war on England 1780.
As we will see shortly, the great bulk of the fighting, and all definitive battles that ultimately decided the war, took place in theaters other than the Americas. The story that the hard-fighting colonials defeated the largest and best equipped military on Earth due to their intense devotion to Washington and the other leaders is false.
The story that the great majority of colonials supported the war is also untrue. The ‘British Headquarters Papers, New York,’ also known as the Carleton Papers, contain records kept by commanders-in-chief of the British Army in North America during the American Revolution (1776–1783). These 30,000 manuscript pages provide details of the services of Loyalists of all classes in the war. They list 54,557 American persons who served with or worked for the loyalist (British) cause during the war.
The Americans didn’t keep very good records, and a large percentage of the records that did exist were lost in the few years after the war was over, so we don’t have exact numbers for the troops that fought for America. Estimates range between 40,000 and 80,000 total fighters. The majority of these people were not locals from the colonies. They had responded to the advertising in Europe and crossed the Atlantic Ocean to get the free land. Again, we don’t have exact numbers from the colonialists, so we don’t know for sure, but it appears that more people from the colonies fought on the side of the British than on the side of the separatists.
The American Actions
The British brought over a total of 56,000 soldiers over the course of the war to fight the separatists. The British also hired 30,000 German mercenaries.
From the first, the British forces dominated the fighting. General Howe lead the British forces. They landed on Long Island on August 22, 1776 and began to set up their forces. They attacked on August 27. Washington gave up his positions on the island and retreated to Manhattan on August 30th.
Howe began his attack on Washington’s positions in Manhattan on September 15, 1776. Within a few days, all of Washington’s troops had retreated to what is now called ‘Fort Washington,’ a position on the north side of the island that was the highest point on the island and its strongest fortified position.
On September 21, New York City was destroyed in a fire, the worst disaster ever to hit that city. The fire destroyed an estimated 2/3 of the buildings in New York. According to the British account of the fire, a team of 230 saboteurs, led by Captain Nathan Hale (under the command of Washington) went to the fire houses and destroyed all of the firefighting equipment of the city. They then began to set fires all over the city, burning much of it to the ground.
Where did the British get the idea that Captain Hale, acting under orders from Washington, had set the fires? As the fires in Manhattan burned, Hale had traveled across the river to Queens. He was drinking in a tavern and told people that he had been involved in the fire. A British solder, Major Robert Rogers, in civilian clothes, went to Hale and bought him a drink, thanking him for his service. Hale then told Rogers everything. Rogers told the authorities who arrested Hale for the act. Hale, drunk by then, continued to brag about the action. The British court marshalled him the next day and, again, he bragged about having burned the city down, so he was sentenced to hang, and was indeed hanged shortly thereafter.
To his dying day, Washington denied the account. He said Hale was a spy, sent in to discover information about the British positions, and none of the continentals had anything to do with the fire. The history books believe him of course: he won the war and the writers of the history books were working for the government Washington created.
Howe took Fort Washington on November 15. Washington himself was at Fort Lee, on the other side of the Hudson River. Three days later, under British bombardment, he abandoned For Lee with his 2,000 remaining troops (Howe had captured 2,838 of Washington’s troops, more than half his army, when he took Fort Washington). He headed south through New Jersey.
Washington was defeated at virtually every battle. After a year of battle, he had been driven into the remote mountains of Pennsylvania, in the isolated village of Valley Forge, where he stayed in the winter of 1777-1778.
In 1778, France declared war in an alliance with Spain. Spain and Holland were both preparing for war (Spain would officially declare war on England in 1779 and Holland in 1780). All three countries began massive shipments of both manpower and material to the colonial army in the hopes that it could keep a large part of the British forces occupied while they arranged their attacks in other theaters.
In 1778, France and Spain began preparing for the largest action of the war, a planned invasion of England itself, with 40,000 men. This was to be called the ‘Armada of 1779.’ The British had to move troops from other theaters to protect their homeland.
Meanwhile, France, Spain, and Holland, all worked together in a coordinated effort to wipe out as much British shipping as they could. They managed to prevent British supply ships from getting through to the American ports for most of the war.
Finally, with the help of armies sent by three other countries, and the British forces unable to get reinforcements or supplies due to the naval blockade, Washington’s troops began to push the British back. Howe had been removed from command due to his failure to take out the Continental Army when they were at Valley Forge. His replacement, Cornwallis, was driven back to Yorktown, where the French Fleet stood to prevent the British from removing their troops. Cornwallis was trapped. He surrendered to a contingent of 5,500 French troops under the command of Jean-Baptiste Donatien de Vimeur, comte de Rochambeau. on October 19, 1781.
The Rest of the War
France took advantage of the harm done to the British Navy by taking the islands of Dominica, Grenada, Saint Vincent, Montserrat, Tobago, St. Kitts, the Turks, and Caicos Islands. France and Spain joined forces to invade England in 1779, but the invasion failed. French and Spanish forces besieged Gibraltar from 1781 to 1783 but didn’t defeat the troops there. The French captured Minorca in Europe and Demerara and Essequibo in South America in February 1782.
In India, a French fleet commanded by the Bailli de Suffren fought a series of largely inconclusive battles with a British fleet under Sir Edward Hughes, and the only major military land action, the 1783 Siege of Cuddalore, was cut short by news that a preliminary peace had been signed.
The two sides were tired of fighting.
Representatives of England, France, Holland, and Spain signed the ‘Second Treaty of Paris’ on September 13, 1783, ending the war. The combatants didn’t invite the United States to sign, even though the treaty officially created the United States of America.
For the next month, the British hastily evacuated loyalists from New York. Over the course of the war, about 30,000 black slaves had traveled to New York City and to freedom. (The British freed all slaves in areas under their control.) The treaty required that all slaves be returned to their owners, but the British commander refused to comply. November 21, 1783, George Washington and Governor George Clinton entered New York City. The war was over.
The treaty that created the United States didn’t even mention the war, it said there had been a ‘misunderstanding.’ Here is the text of the 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 away four times more land than was included in the states listed in the document.
A new nation had come to exist. This nation had more freedom, liberty, and equality than had ever existed in any nation for any kind of person for all of history. But only a certain kind of person had these advantages: a corporate person.
On January 21, 1785, representatives of the Government of the United States of America negotiated the ‘purchase’ of all land in the southern and eastern parts of Ohio from the Native American groups that lived there under an agreement called the ‘Treaty of Fort McIntosh.’
The lands were ‘purchased’ this way: several prominent members of the negotiating tribes were kidnapped and held hostage. The government agreed to release them unharmed if the tribal leaders would agree to put an X mark on a piece of paper in front of a notary public, to make it a valid signature. Here are the terms of the treaty:
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. [Source: https://dc.library.okstate.edu/digital/collection/kapplers]
The treaty specified that payment would be made for the land:
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 United States now owned the land. It could begin disposing of it as it had agreed to do before the war.
Who Got the Land?
In this initial ‘purchase’ of land, the United States government obtained 20,312 sections (square miles) of land. The land ordinance stipulated that 252 of these sections be granted to soldiers who had fought for the Continental Army, fulfilling the terms of the enlistment contracts.
The soldiers got slightly more than 1% of the land taken from the American native people in this transaction.
What happened to the rest?
Between October of 1787 and July of 1788, the new Government of the United States sold more than half of this land, 10,593 square miles (6,780,000 acres) to a company called ‘The Ohio Company of Associates’ and its wholly owned subsidiary ‘the Scotio Companies.’ The company was run by four top military officials: Rufus Putnam, Benjamin Tupper, Samuel Parsons and Manasseh Cutler. The company didn’t buy its land with real money; the land was paid for with military script, the ‘continental dollars’ which had been issued during the war and were never redeemed for hard currency and therefore effectively worthless. The largest shareholder was the new secretary of the U.S. Treasury, William Duer. George Washington was part of the project and personally submitted the petition for this land to the Congress. It was, of course, approved.
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 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 the company’s 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 Scotio Companies, or other subsidiaries and associates of these companies.
Over the next decade, the Congress appropriated additional lands, removing the inhabitants if they would not leave voluntarily. Until 1830, this removal was not officially sanctioned; that year, the Congress passed ‘The Indian Removal Act’ which made it lawful for the government to remove Indians from all land east of the Mississippi and ‘extinguish’ their rights to the land, even if they had been given this land for the rest of time in treaties.
Creation of A Corporate Paradise
After the proclamation of 1764, certain very powerful people in America decided they could not make the world around them work as they wanted it to work if the land around them remained a part of the country of England. They had to turn it into an independent entity, one where they could make the rules. They gained this right in 1784, with the Second Treaty of Paris, that created the United States of America. They no longer had any requirement to adhere to any policies of England. They could make their own laws and rules.
They wanted corporations to have protections that they had not enjoyed under English rule and they basically organized their most important document, their Constitution, so that this was the case. Let’s look at the specific rights that they gave corporations in the new system:
Before the United States began issuing charters, corporations could only get rights for a limited period of time. As the end of the charter period approached, shareholders who wanted the corporation to continue to exist would have to petition the government for renewal of their charter. The government could then decide to renew with no changes, renew with certain changes, or not renew at all.
Governments commonly reduced rights of corporations at renewal time. Consider the British East India Company. The company got its first charter on December 31, 1600; this charter had a 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, the government had transferred so many rights away from the company that there was nothing left of the East India Company. The company’s charter expired, and the company ceased to exist.
In the United States, people who wanted to form corporations didn’t have to request the right to open a company from the government and then wait for approval. People wrote their charters themselves and then simply registered them with the corporate commissions. This policy persists in the modern United States.
Who decides how long the corporate charter will last?
If you want to create a corporation (and you can if you do it in the United States; anyone can), you can decide this yourself. If you want it to last ‘until dissolved by the shareholders,’ you can put this into the charter. If the shareholders want to keep the company for a million years (and if there is a world in a million years) the company will last a million years.
Why does this matter?
If you are opening a company that will have a limited life, you have to set it up so that it will do everything it is designed to do before the term expires. If the facilities of the company are expected to last a century, and if the only way to make a profit from them is to use them for a century and therefore spread the cost of building them over a century, you won’t be able to justify the facilities if you can’t get a charter for at least a century.
A lot of factories that exist in the world today require investments that are so vast they are hard for the human mind to imagine. These factories have to be able to operate for a very long time, and spread their costs over a very long time, or they won’t make profits. If companies can’t get very long charters, they won’t build these kinds of factories.
For example, Forbes magazine points out that it costs about $10 billion to build a computer chip factory. For reference, the Louisiana purchase price of $15 million, adjusted for inflation, would be $1,040 million or $1.04 billion in today’s money. To build a single computer chip factory, you would have to spend roughly ten times the amount the United States paid for a fourth of its land.
People are going to be far more confident in investing if they know the company is going to be around and generating income indefinitely. Say you are putting a large amount of money—your life savings—into a company that is making computer chips. If the company had a 15-year charter that might not get renewed, you would have to worry a lot about the investment. The company will have to spend most of the charter period designing and building the factory. By the time the factory is operating and generating revenues, the company will be at the mercy of the government. If the company has a forever charter, however, 15 years is nothing. After 15 years, the company will be operating and generating very nice free cash flows. (This would have to be true or no one would build the factory; they build it to make money.) Your shares in the factory will still have an infinite life ahead of them. If you want to sell them, you will easily be able to do so, probably for far more than you initially invested.
Forever rights also have important political implications: if companies know they are going to be around for an indefinite period of time, they can justify building massive political lobbies to manipulate legislation. They can invest in media to shape public opinion for their benefit and they can form truly massive ‘political action committees’ (PACs) to manipulate elections.
No one today is working in London to protect the interests of the British East India Company. But the Du Pont Company, which has been around more than two centuries, started building a lobbying organization in the 1800s and continues to employ hundreds of people to figure out new and better ways to manipulate the government to get policy advances the interest of the company.
Article 1 of the Constitution protects the rights of corporations. Here is the relevant text:
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 nine separate rules:
1. No State shall enter into any Treaty, Alliance or Confederation;
2. No State shall grant Letters of Marque and Reprisal;
3. No State shall coin Money;
4. No State shall emit Bills of Credit;
5. No State shall make anything but gold and silver Coin a Tender in Payment of Debts;
6. No State shall pass any Bill of Attainder;
7. No State shall pass any ex post facto Law;
8. No State shall pass any Law impairing the Obligation of Contracts;
9. No State shall grant any Title of Nobility.
The sentence that wound up turning corporations into persons under the law is sentence eight: ‘No State shall pass any Law impairing the Obligation of Contracts.’
This sentence 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 the issue.
As we will see shortly, the Supreme Court was called to consider this issue in the case of Fletcher v. Peck. In that case, a corporation had made a specific contract that the government of Georgia wanted to nullify. (The company had purchased land from someone who did not own it and then proceeded to sell the land to others.) The Georgia government claimed that it had the right to nullify the contract because it was not made between two persons, but between a government official and a corporation and, since corporations existed as servants of the people, if the corporations did wrong or broke the law the state could nullify their contracts without violating the rights of any human people.
The court ruled that it didn’t matter. The state has no right to interfere.
After the delegates to the Constitutional Convention approved the document, they realized that history might reflect poorly on them because the document didn’t actually protect any of the rights of the people in any way. They added a group of amendments called the ‘Bill of Rights’ that granted certain rights to human persons. The Supreme Court has since ruled that all of the rights granted to human persons in the amendments also apply to corporate persons.
This includes ‘freedom of speech,’ and since the court has ruled that giving money to government officials is a form of ‘speech,’ it includes the right to bribe government officials provided the companies do it the right way.
The First Amendment reads:
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.’ The ‘speaker’ may be a human person or a corporate person; the protection applies equally to all entities the constitution recognizes as ‘persons.’
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 a vote, the courts consider it to be ‘free speech,’ not bribery, and protected under the law.
Here is an example that will help you see the difference between bribery and free speech: say you tell a legislator you will give her $1 million for her vote on a measure and she agrees to sell her vote to you. In forming this agreement, you make a contract with her to buy her vote (either orally or in writing), then she votes as you request, and you give her the $1 million. This is called ‘bribery.’
However, if any of these conditions is not met, it is not considered bribery. For example, 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 during the vote to see if she is ‘friendly.’ If she is, she will get the $1 million; if not, she won’t. (You are only paying for ‘friendliness,’ not the vote, and it is not illegal to buy friends.) Then, she votes for your cause. You then give her the $1 million and tell her that you may want her to be your friend again and will make the same deal each time.
Say you do this again, and everything happens in the same way. This is not bribery under the law. It is not only not illegal, but it can’t even legally be regulated. The government is prohibited from involving itself.
Corporations know exactly what legislation they want. They can afford to pay attorneys to write it. They can then tell their ‘friends’ in government that they are figuring out who will get their lobbying money and letting them know that they are looking for friends of the cause to introduce legislation for them. They can offer gifts to any government officials who prove their friendliness to the issue by voting for the bill. If they want to do something that the majority of the people of the United States would not approve of, say increase subsidies on burning coal, they can create legislation with deceptive names like ‘Clean Air Act’ or ‘Clear Skies Initiative’ to increase the subsidies, and hide the actual effects of the law in thousands of pages of legal jargon that no real person could read and remain sane. The companies will get what they want; there is nothing that the people can do about it.
Corporate persons have the right to support any candidate 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 can.
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. [Americans for Campaign Reform, ‘Executive Summary: Does Money Buy Elections?’]
Logic tells us that money buys elections. The study confirms this. In the United States, money equals 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. The government is barred from 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.
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 in Indian Point, New York, 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 an 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 permanently destroyed. 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?
They are never liable for damage caused by companies they own, even if the know that what they are doing is dangerous. They wouldn’t be liable even if they had intentionally caused the disaster for personal gain.
This is not a flaw in the system. It is the 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 which 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.
A New Country and New Policies
On January 21 of 1785, representatives of the government of the United States of America purchased 13 million acres of land from the people they called ‘Indians;’ this included all land in the southern and eastern parts of the current State of Ohio. The purchase agreement was called ‘the Treaty of Fort McIntosh.’
What did the sellers get in return for this land (enough to support 13 million people): the treaty makes their compensation very clear:
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.
What goods? Well, the government could decide what goods. How much? The government could decide this too.
This was clearly NOT a purchase agreement negotiated in good faith between a willing seller who expected to receive something of equal value to the item given up in exchange for the land. The government did get people who they classified as ‘Indians’ to put X marks on the documents in the presence of notary publics who certified that they were valid signatures. For a very long period in history, this was enough in the United States: it meant that ‘Indians’ had sold the land. Any that didn’t leave were trespassing and could be removed by force.
Who Got the Land?
The Congress set aside 161,280 acres of this land (252 sections) to fulfill the terms of enlistment contracts made to soldiers who had fought in the war. Another 6,780,000 acres went to a company called ‘The Ohio Company of Associates’ and its wholly owned subsidiary ‘the Scotio Companies.’ The majority of the shareholders didn’t want to disclose their identity. (People could own stock anonymously long before the United States was formed; the Dutch East India Company had pioneered the structures that made this possible over 160 years earlier.) But we know who brought the petition for these land sales to Congress for approval, and personally pushed it through Congress. We know the operating officers of the company, Rufus Putnam, Benjamin Tupper, Samuel Parsons and Manasseh Cutler; all of these men were close personal associates of George Washington.
All of the official documents of the Ohio Company of Associates are now in the library of the University of Ohio at Marietta. 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 the company’s headquarters. Corporate resolutions authorized the layout of the streets, public areas, and dictated the lot sizes to be subdivided and sold in markets. The money went to the shareholders of the Ohio Company of Associates, the Scotio Companies, and other subsidiaries and associates of these companies. Over the next few years, the rest of the land that had been ‘purchased’ from the ‘Indians’ went to the company and then more land was ‘purchased,’ the same way.
The great majority of the native people did not accept that anything had been purchased from them. They could not have sold the land even if they were offered a fair price; they didn’t own land and didn’t believe it could be owned. In 1790, Henry Knox, the Secretary of War under President George Washington, ordered Josiah Harmar, commander of the U.S. army in the Northwest Territory, to remove the Native American residents of the lands that the United States had purchased, together with a large buffer of surrounding land.
Harmar was ordered to remove these people, using any force necessary. He ordered his men to use force to get these people out of their homes and out of the territory. His men would not do it. His entire unit deserted. Washington then fired Harmar and replaced him with Arthur St. Clair, then the governor of the newly formed ‘Northwest Territory of the United States,’ which included all land to the north and west of the Ohio river, all the way to the Mississippi River. (This included the current states of Ohio, Indiana, Illinois, Wisconsin, Michigan, Minnesota, and parts of the current state of Pennsylvania.) St. Clair failed for the same reason Harmar had failed: he just couldn’t get his men to do the things necessary to remove the American native people from their homes. Washington took personal control of the operation.
Problems continued in the Northwest Territories through the next few years, but massive outbreaks of smallpox went through the American native communities over these years, making it relatively easy to deal with the natives. (Washington’s troops were all inoculated against smallpox and did not get the disease; see sidebar for more information.) Over the next few years, the government purchased additional land from the American native people and granted it to the Ohio company, The Scotio Company, and other affiliated companies. Then the companies moved west, gaining ownership over and selling land in the current states of Indiana, Illinois, and Michigan. They won the war, so they got the spoils.
How and why the Supreme Court interpreted the constitution to grant unlimited rights to Corporations
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 purchase agreements were held in secret because the government of Georgia didn’t own the land in question. British treaties had created an area called Yazoo River Indian Reserves. All the land sold to the companies were in these reserves. The governor of Georgia thought that the United States didn’t have to honor the British treaties anymore because they weren’t a part of England anymore. The land was open; it belonged to whoever took it. The corporations were wiling to take it and he was more than happy to accept money from them in exchange for his permission for them to try. The ‘sale’ itself didn’t net any money for the state of Georgia; the government of Georgia had agreed to sell the land on credit. The only payments that the companies had made had been bribes, paid to the governor and others involved in the sale. (This is not an allegation; all of the negotiators, including the governor, were later tried for and convicted of accepting bribes.)
When the public found out about this deal, they didn’t like it. Not only did it expose their dishonesty for stealing land that had been given to people in legitimate treaties, it didn’t net any money for the state or the people of the state. All the money went to the government officials, the land went to the corporations, and the people of both jurisdictions (the State of Georgia and the native people who lost their land) got nothing. At the time, a politician named ‘Jared Irwin’ was running for governor of Georgia. He called the land sale the ‘Yazoo Land Scandal’ and made it the focal point of his campaign. He promised that, if elected, he would work through the legislature to nullify the sale and restore the land to its rightful owners, the native people.
Irwin was elected and kept his promise: on February 13, 1796, he signed a law that nullified the land sales and ordered all parties who had received payments from the corporations (all of the people who had been bribed) to return the money. The corporations found a way to take the case to court, arguing that the state had no authority to nullify the sale, due to the provisions of Article 1 of the Constitution. Both parties to the lawsuit, Robert Fletcher and John Peck were shareholders of corporations. Fletcher’s corporation had bought a tract of land from Peck’s corporation. Fletcher’s company had paid for the land and claimed to own it. The nullification would essentially take away his company’s property. He claimed that this was a violation of his rights.
The case eventually made it to the Supreme Court. The court ruled that the land sale could not be nullified. Article 1, Section 10 of the constitution prohibited states from interfering in contracts. (The exact text is below.)
Fletcher’s company could keep the land.
There wasn’t anything the Georgia legislature, or for that matter the United States government, could do about it.
This ruling set several important precedents.
One involved American native claims to land. The Georgia legislature did not own the land it sold. The land had been granted to a group of 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 Marshall 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.’
The court had ruled that if the officials of a government wanted to simply take the land that had been reserved forever for Indians under legal contracts, they had this right. They did not even have to bother to come up with excuses or pretend to give compensation (conduct a ‘seisin in fee’). They could then sell this land to whoever they wanted.
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. 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 corporations that got the land by fraud had then sold it. The new owners, including Robert Fletcher, were ‘third persons.’ They had provided a ‘valuable consideration’ and their rights ‘cannot be disregarded.’ Fletcher 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.’
In other words, if you commit fraud to gain title to land, then sell it, the buyer deserves all the protection the law would provide if the buyer had bought from a legal owner.
This seems like a rationalization. If I were to forge a copy of the deed to Justice Marshall’s home, then sell it to a third party for $1 (a ‘valuable consideration’), I doubt Marshall would believe that the third party deserved the full protection of the law to remove Marshall and his family from his home so that the person I sold the home to could move in.
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 six times in the decision as ‘persons.’ The court ruled (without being asked to do so) that corporations are ‘persons.’
This case set precedents for four different issues:
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 a judge rules counter to a Supreme Court Ruling, the losing attorneys may appeal the ruling. 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. If later supreme court judges could reconsider past cases and reverse them, the entire body of law built on the original rulings would lose its foundation. To prevent this the Supreme Court’s authority is limited to cases that have not already been decided in past Supreme Court rulings.
This particular issue has been decided. It cannot be changed through the judicial process. The rights are cast in stone.
Is This Good or Bad?
The new corporations had incredible rights. This led to incredible changes in the way the world worked.
The new types of corporations could justify making investments to build factories and other facilities that would never otherwise be built. A lot of businesses can’t operate without doing things that are very dangerous. A lot of businesses can’t operate without producing pollutants that have great potential to kill, cause disease, and harm the environment. People can’t justify opening these businesses if they think there is even a chance that they may be held personally responsible for the damage. If they formed their companies in the United States, people didn’t have to worry about these things.
Immediately after the United States started these policies, people moved from all over Europe and began opening factories and other businesses in the country. Explosives factories, steel mills, chemical plants, underground mines, and other facilities are incredibly risky. If nothing really bad happens, the owners of these businesses can make incredible amounts of money. If something bad happens and the owners are found personally responsible, they could lose everything they have built up over their lives. People won’t take this risk.
If they created their businesses in the United States, they didn’t have to worry about the risks. They weren’t personally liable, ever. No matter how much damage their facilities cause, they couldn’t ever lose more than the amount they invested in that particular venture. They didn’t have to worry about the government changing the charter or possibly not renewing, after they had made massive investments. In the United States, the government had been set up so that it couldn’t interfere in these things.
Is this a bad thing or a good thing?
That depends on your perspective and what you are trying to accomplish.
A great many of the wonderful things that we now all take for granted would never have existed if not for this system. Shortly after the new corporations became legal, people began to build truly massive steel mills in the United States. These mills dwarfed anything that had ever existed before. People could build them in the United States because they knew the United States government would protect the rights described above.
Steel mills competed both by offering to sell for lower prices and by making higher quality products. The price of steel fell dramatically and people gained access to steel of a quality that had never before existed. People could start building things that they couldn’t build before, like thousand-mile long rail systems for trains and steam engines that run locomotives that can pull hundreds of tons of cargo. In time, people built mills that mass-produced steel in such incredible quantities that ordinary people could afford steel tools for the first time in history.
Building steel that was high enough in quality and cheap enough that engines could be built that could run on diesel and gasoline. They could build cars that were cheap enough for ordinary people to buy.
The new corporations could fund research in a new way, pouring incredible amounts of wealth into searching for new and better ways to do things. Once the inventions existed, factories could start churning out new products at prices so low it is hard to even imagine how they could do it. Consider a smartphone today: it has a computer in it far more powerful than the computer that guided the first rocket to the moon. It has a camera, voice recorder, navigation system that gives your position accurately to a few feet, and connection to a network of servers that can hold more information than the largest library. And, of course, it has a phone.
How much would you expect to pay for such a device? If you could go back to before the new corporations existed and asked this question, the people wouldn’t even answer you. They would think you were insane: such devices could never exist. If you could go back to the 1960s, when primitive prototypes of all of the components of smartphones existed but were so expensive that only corporations and the super-wealthy could afford them, the estimates would be sky high. But you can go to a pawn shop today and buy such devices for the equivalent of a day’s wages.
Are the changes in corporations that have taken place over the last 420 years good or bad for the human race?
They are very, very good in a way.
They are also very, very bad in a way.
They are good because they have resulted in innovations and technologies that almost certainly wouldn’t have existed if not for these corporations.
It is possible to turn the things that make up the planet Earth into products that can make life very pleasant and comfortable for humans. The largest component of the part of the Earth we can get to, the crust, is silicon dioxide. This is the raw material we can use to make solar photoelectric cells that can produce all the electricity we could ever want from the sun. Silicon dioxide is also the raw material that we use to make glass (heat sand and it turns into glass) and the main ‘filler’ used for concrete in buildings.
The next most common material in the Earth’s crust, after silicon dioxide, is aluminum. We can process this into electric wires, car motors, airplane parts, refrigerator coils, and millions of other useful products. Next most abundant is iron, used to make steel. Next after that is calcium, the binder for concrete. We can literally turn these raw materials that the earth is made of into luxury high rise skyscrapers that can allow us all to live in what writers of the past depicted as heaven, high in the clouds with all manner of comforts at our disposal.
Almost certainly, the great majority of these things would never be available at all if not for the new kinds of corporations that came to exist in the United States at the end of the 1700s.
Why is this the case?
We can tell that they would not have existed because of the history of Rome. As of the beginning of the first century on the calendar we now use (the year zero), Rome had basically the same level of technology as England and Europe during the 1700s. They went through 322 years of development before Constantine forced the empire into the Dark Ages. They knew how to mass-produce steel, concrete and glass. But they never had the massive steel mills that the United States began building almost immediately after the new corporations became reality. Their steel never became cheap enough to allow them to make train tracks or beams for bridges; the quality never improved enough to make engines for vehicles. They were almost there; they just didn’t have the edge to push them into a true technological revolution. They didn’t discover electricity, they never had televisions or radios, they never had airplanes or satellites, they never had computers or photography, let alone movies and music players.
The changes that have taken place in the last 230 years, since the new corporations became a reality, have changed the world forever. They brought us technology that we almost certainly would have never developed otherwise. No matter what the disadvantages of the corporations that now dominate the world, we need to thank people like Washington, Jefferson, Adams, and the other corporate moguls that put together the new system. They gave us these things.
They gave us more than this: they showed us critical tools that we, the members of the human race and inhabitants of the planet Earth, can use to bring about continued growth and progress in the future. Perhaps, if we had a society that put the human race in charge (like the society that Alexander put into place, built on the principles worked out by Socrates), the human race may be in a position to make critical decisions about how we want the world to work. We can look at the empowered corporations developed in the United States as tools. Do we want to use these tools? Do we want to build versions of them but with slight limits, with as many of the good features as we can have and as few of the bad ones as possible?
If we hadn’t been through the experience of the past few centuries, we wouldn’t have this option. The experience is a gift to the human race, perhaps one that will benefit us for the rest of eternity and bring us advantages beyond imagination. Who knows what we will learn about the other beings in the universe from radio signals we will be able to interpret from space? Who knows what we will learn by studying DNA in machines that would almost certainly have never been invented without the events that took place in the period between 1787 and 2020?
From another perspective, however, these events are potentially very bad for the human race.
We currently have society types that do not put the human race in charge. In these societies, the profit-motivated corporations with their allies the military-focused xenophobic governments are in charge. If the shareholders of the corporations and government leaders want something, but the people of the world want something else, the corporations and governments will get their way. We the people have no forum we can use to make our desires reality.
As I have pointed out several times, this book is a part of a series about the nature of human societies. It is designed to provide a background of information to help you understand what is possible. Humans are extremely capable beings. We can organize ourselves many different ways. The societies that existed in the past tell us that we really do have choices. If we understand what has happened in the past, and how we got to where we are now, we can map out a plan for the future that will give us (again, ‘us’ means ‘the members of the human race and inhabitants of the planet Earth) a forum. It will give us rights to flows of wealth and these rights will give us powers. We can put ourselves in a position to use information about the past to build sound, sane, and healthy societies. We have a long way to go to get there but we really do have the tools to get there. The central book of this series, Preventing Extinction, explains how to make this happen.
But we have a few more events in history to go over before we are up to date. Hopefully, the rest of the book will help you see that we really do have a great deal of hope.