Tuesday, June 25, 2013

Our Decrepit Constitution: US Supreme Court merges with the robber barons

The years after the Civil War marked the beginning of modern America. Some people became extremely rich through government largess. The government paid companies to build railroads by giving away the land the rails passed by. Slavery was replaced by a system called sharecropping that tied people to the land like medieval serfs. Factories paid children and women starvation wages and forced them to work 60 hours or more a week. Corporations made even more money than they had before the war using slave labor. Financiers became the heroes of America by loaning the government enough money to end recessions—which financiers were responsible for starting.

The Progressive movement arose in opposition to corporate abuses. For awhile it looked like life would get a little easier for workers. The Supreme Court ruled (Munn v. Illinois (1877)) that legislatures could pass rules to control corporate pricing under the Commerce Clause of the Constitution. This decision gave hope that We the People could fight back against the corporations that were sucking the life from the country.

Vain hope. The courts soon became the willing bedfellows of the corporations. The Supreme Court ruling in Chicago, Milwaukee & St. Paul Railway Co. v. Minnesota(1890) struck down a Minnesota act that established a railway commission with the power to set rates and timetables, which were the instruments by which railways exercised their monopoly powers. The Court ruled that the courts, not the legislatures, should decide what rates were appropriate.

This action reversed the spirit of Munn,which appeared to reserve that power for the legislatures, and at the same time made corporations more powerful than the government. The corporations were able to influence legislatures through largess. The people could elect legislatures that looked out for their interests, but the Court now ruled that those anti-corporate elections would count for nothing.

The Supreme Court was moving toward granting corporations full personhood. The framers had not foreseen this development, nor provided for it in the Constitution. The Court declared in Pembina Consolidated Silver Mining Co. v. Pennsylvania (1888) that corporations were persons entitled to protection under the due process clause of the Fourteenth Amendment, despite the fact that the Fourteenth Amendment was intended solely to protect the rights of freedmen. This definition gave corporations protection from "unreasonable regulation" and taxation. In practice, it gave them virtual immunity from regulation and taxation, since the courts alone could determine what was reasonable and appeals were costly and time-consuming.

Another pro-corporation development at this time was the principle, right of contract, beginning with Godcharles v. Wigeman, 113 Pa. St. 431 (1866). The court in Godcharles declared that a law requiring laborers to be paid in cash instead of company scrip was degrading to the laborer, because it robbed the laborer of his right to make a contract for himself. By this declaration, the court accepted the fiction that what existed in the law books existed in reality and that a Corporation could not compel a laborer to accept company scrip in lieu of wages, because the laborer had an equal bargaining position with the corporation.

The courts forbade the state legislature to interfere with any contract duly made between two parties and particularly applied this principle to contracts between laborers and corporations, which they considered equal partners in an employment agreement. This policy meant that no law could interfere with an employment contract, no matter how unfair its terms might be to the laborer. Courts ignored the obvious fact that corporations, which had everything, were not equal to laborers, who had nothing. Courts assumed that laborers had the ability to walk away from any contract they did not like, despite the impossibility for most laborers, hardly able to feed and clothe their families, to do any such thing. Right of contract existed only in the minds of corporate lawyers and judges, not in the real world of need and subsistence.

The courts wielded the Fourteenth Amendment due process clause to protect corporations from state regulation. While doing so, they struck down numerous progressive laws that provided laborers with the eight-hour day, the right to be paid weekly, the right to work less than sixty hours a week, the right to be paid in cash rather than company store credits, the right not to pay higher prices than non-employees in the company stores, and many others.

The courts of the late nineteenth century ignored the common law precedents of the eighteenth century in their attitude toward the poor. They forgot the words of Lord Northington: “Necessitous men are not, truly speaking, free men; but, to answer a present exigency, will submit to any terms that the crafty may impose upon them.” (Vernon v. Bethell (1762)). In modern English, this means, "Poor men are not, truly speaking, free men, but to answer a pressing need, will accept any terms an unscrupulous employer may offer them."

See Arnold M. Paul, Legal Progressivism, the Courts, and the Crisis of the 1890s, Business History Review, 83 (1959) at http://law2.umkc.edu/faculty/Profiles/Kobach/AmerLegalHistory/Winter2005/Legal%20Progressivism.pdf

No comments: