The Slaughterhouse Cases, or, corporations are actually people

Posted on February 27, 2012. Filed under: American history, Economics, U.S. Constitution |

Hello and welcome to this post on the 1869 Slaughterhouse Cases, legal decisions that changed the nature of business in the United States forever. It’s hard to believe that such a ground-breaking series of legal cases can be so invisible to the general American public today, but it’s sadly true. So we’re going to take a good look and see how we started down the path of legal rights for corporations and corporations being given the rights of individual citizens.

America, and then the U.S., had been viewed as a land where everyone had the right to rise by working hard from the start of European settlement. The immigrant, the poor person, the obscure and uneducated could always better their lot and improve themselves by working. Only in the U.S. was land freely available and relatively cheap, so anyone could farm if they really worked at it. Only in the U.S. were factories abundant, so anyone, even the unskilled laborer or the city poor, could earn a living wage. One of the most persuasive arguments anti-slavery groups made in the antebellum period was that slave labor robbed free men of the chance to work; the Free Soil political party made right-to-labor its main plank. The U.S. could only be great so long as its citizens had the opportunity to contribute their honest toil to the economy and improve both themselves and their nation.

But until 1869, no official body had made the claim that individuals had a legal right to pursue their occupation, no matter the consequences to others. Everyone had the opportunity to work, but no one had the legal protection to work in any way they saw fit. That would all change with a group of butchers in Louisiana.

In the mid-1800s, many butchers worked just north of New Orleans, throwing their offal into the Mississippi River. The end result was that low tide meant the reek of rotting animal carcasses filled the city, and the city’s drinking water was irredeemably polluted with blood and feces. To remedy this situation (at least for New Orleans), the city government requested that the butchers move their shops south of the city. But this wasn’t the simple offer it seemed: the land south of the city that the butchers were to remove to was owned by the state, which demanded a high rent for the new space. The butchers, fearing bankruptcy if they had to pay the high rents, sued the state and the corporation it had set up to administer the land.

Their claim was not just that the rents were unfair and that the state-owned company had no competition and could therefore raise the rents as high as it liked. That would be simple extortion. Instead, they took their argument to a new level by saying that they had a constitutionally protected right to pursue an occupation, and that forcing them to move deprived the butchers of their right to do their work as they saw fit. If they felt that working upriver from the city of New Orleans was good for their business, then any attempt to remove them—for any reason, even the disease their offal brought to the residents of the city—was an unconstitutional attempt to deprive them of the right to work.

The lower courts which heard this case found in favor of the state, but the butchers persisted, and in 1873 they took their case all the way to the Supreme Court. They also came up with an argument worthy of that highest of courts: the lawyers for the butchers actually went so far as to bring in the newly passed Fourteenth Amendment to support their case. This Amendment was meant to extend federal protection to formerly enslaved black Americans by overriding any possible state or local laws that would deny them due process and basically re-enslave them. The Slaughterhouse lawyers applied it to say that the state was depriving the butchers of their right to work and make a living while denying them due process under the law. You can’t just tell people to move because they’re poisoning a city’s water supply, the lawyers said; you have to take into consideration those people’s right to make a living, and if moving their business will harm that living, they can’t be made to move. People have a constitutionally protected right to work.

The Court found in favor of the state once again, but only by a 5-4 margin. It did not reject the butchers’ claims that they had a constitutional right to practice their profession in the way that seemed best to them. It decided, rather, that the Fourteenth Amendment was only about federal protection of citizenship; it was meant to preserve the citizenship of formerly enslaved people against state laws. Slavery was now illegal, and could not be reinstated by state laws. The butchers had not been deprived of their citizenship. The right to work could be managed by each state as it saw fit, and in the case of the butchers, the state had a clear right to uphold the common good by removing a clear threat to the public health—New Orleans had suffered nearly a dozen cholera outbreaks since 1832, which were clearly related to the offal in the drinking water. The state has a right and a duty to protect its citizens, stated the majority opinion, and the butchers must go.

But the minority opinion latched on to the idea that businesses themselves had a right to exist. Justice Stephen Field wrote in the dissenting opinion,

“It is contended in justification for the act in question that it was adopted in the interest of the city, to promote its cleanliness and protect its health, and was the legitimate exercise of what is termed the police power of the State. That power undoubtedly extends to all regulations affecting the health, good order, morals, peace, and safety of society, and is exercised on a great variety of subjects, and in almost numberless ways. All sorts of restrictions and burdens are imposed under it, and when these are not in conflict with any constitutional prohibitions, or fundamental principles, they cannot be successfully assailed in a judicial tribunal.  With this power of the State and its legitimate exercise I shall not differ from the majority of the court. But under the pretence of prescribing a police regulation the State cannot be permitted to encroach upon any of the just rights of the citizen, which the Constitution intended to secure against abridgment.

…It is contended in justification for the act in question that it was adopted in the interest of the city, to promote its cleanliness and protect its health, and was the legitimate exercise of what is termed the police power of the State. That power undoubtedly extends to all regulations affecting the health, good order, morals, peace, and safety of society, and is exercised on a great variety of subjects, and in almost numberless ways. All sorts of restrictions and burdens are imposed under it, and when these are not in conflict with any constitutional prohibitions, or fundamental principles, they cannot be successfully assailed in a judicial tribunal. ” [my italics]

The subtle change going on here is evident, first in the phrase “the just rights of the citizen”. While Field most likely meant it to refer to the men who worked at their jobs, later corporate lawyers and big business owners would morph “citizen” to mean the business itself—the corporation. If a person has the right to work, then doesn’t a business have the right to exist, so it can provide that work? And if a business has a right to exist, it has the right to operate in any way it sees fit. Successful business was determined by profits, and if a profitable company pursued certain business tactics like monopoly or price-fixing or child labor, who could tell that company it had to stop? It was providing work for thousands of people, creating jobs, and fueling the economy. What outside body could decide that those profitable tactics were wrong? How could anything that made money, jobs, and materials be wrong? The law as people knew it simply did not apply to business. Business was a new class of citizen.

Secondly, the right of a government to impose restrictions in the name of the common good and public health and safety is unimpeached only when it is “not in conflict with any constitutional prohibitions”. But if corporations have a constitutionally protected right to exist and conduct business as they see fit, then no government can impose any restrictions on them.

Field went even further, invoking the spectre of  “involuntary servitude” and using language [in italics] that seemed to refer to the forced removal of the butchers and the restriction that they work only in one allotted location:

“[It is] clear that [the words “involuntary servitude”] include something more than slavery in the strict sense of the term; they include also serfage, vassalage, villenage, peonage, and all other forms of compulsory service for the mere benefit or pleasure of others. Nor is this the full import of the terms. The abolition of slavery and involuntary servitude was intended to make every one born in this country a freeman, and as such to give to him the right to pursue the ordinary avocations of life without other restraint than such as affects all others, and to enjoy equally with them the fruits of his labor. …A person allowed to pursue only one trade or calling, and only in one locality of the country, would not be, in the strict sense of the term, in a condition of slavery, but probably none would deny that he would be in a condition of servitude. He certainly would not possess the liberties nor enjoy the privileges of a freeman. The compulsion which would force him to labor even for his own benefit only in one direction, or in one place, would be almost as oppressive and nearly as great an invasion of his liberty as the compulsion which would force him to labor for the benefit or pleasure of another, and would equally constitute an element of servitude.” [my italics]

(It is bitterly ironic that slavery would come up in this case, as one of the lawyers for the butchers was John A. Campbell, who had resigned from the Supreme Court to serve the Confederacy at the start of the Civil War and spent his post-war career thwarting black Americans’ attempts to enjoy the protections of the Fourteenth Amendment.)

The door was now open to other lawyers representing much bigger clients than the Louisiana butchers to claim that any restrictions on big business was tantamount to slavery. Price-fixing, monopolies, hostile takeovers, graft, child labor, inferior-grade materials (including foodstuffs), corrupt trusts, and other practices would all be protected or ignored by the law on the grounds that these were the necessary components of successful corporations. The U.S. government was particularly susceptible to this argument in 1873. Determined to grow the economy after the Civil War, and devastated by the financial panic of 1873 itself, the government was more willing to let profitable corporations do whatever it took to build the economy.

So corporations began to take on the rights of citizens, and very protected citizens at that, while workers, small businessmen, consumers, and others were relegated to second- or third-class citizens. It would take decades of Progressive reforms, beginning in the late 1800s and lasting into the mid-20th century, to undo the damage and make corporations accountable to the law.

We are seeing a pendulum swing now, though, in the early 21st century, as corporations have gained the status of private citizens so far as political campaign contributions go, and the federal government is loathe to tax corporations appropriately. Who knows what the next Slaughterhouse Case will be?

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One Response to “The Slaughterhouse Cases, or, corporations are actually people”

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Not sure if you’ve already read Lawrence Friedman’s History of American Law, but it includes a fascinating description of the evolution of corporate law.

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