The Gilded Age Goes On and On
Some will rob you with a six-gun and some with a fountain pen.
--Woody Guthrie, “Pretty Boy Floyd”
This we know: Californians were robbed.
Was it all done legally?
Did we deserve it?
This we are learning: We’ve agreed to pay the robbers for years to come.
It’s the way of the free market system.
This we forget: It’s not necessarily the way of the free market system.
Just a century ago, the United States had a different notion of the corporation in our civic life. A far healthier attitude, if you ask me.
“The corporation is a creature of the state. It is presumed to be incorporated for the benefit of the public,” the U.S. Supreme Court observed in 1906.
May I repeat: The highest court in the land, not a century ago, presumed public “benefit” from the chartering of corporations. Go deeper in history. It’s a principle rooted in our heritage as far back as that first apple pie. The preamble of our Constitution promises a more perfect union to “promote the general welfare.”
Too bad we forgot our purpose.
I’m referring, of course, to those runaway public corporations that are in the business of selling electrical power and natural gas across state lines. These paper creations and their much-demonized CEOs, with their cowboy hats and fountain pens, tossed around penny-ante campaign contributions and beguiled us. Enhancing the profit motive for utility service was somehow supposed to result in less profit and more power.
Sorry, but it’s that simple. And everyone knows how it’s turned out.
But can we blame these corporations, really?
You can say that 700% price increases are greedy. You might accuse those who achieved them of breaking the law in their zeal. But, unfortunately, you can’t say it’s wrong for a corporation to strive for the highest prices and biggest profits. And the fact that these goals inflict suffering on millions of people is irrelevant. The fact that they could drag down the nation’s economic rebound is immaterial. If children have to sit in darkened classrooms, oh well.
But that, friends, is absurd. And if I might say so, un-American.
Our founding fathers would be reaching for the barf bag in the seat pocket in front of them, if not their flintlocks.
Colonial Americans feared the unrestrained power of all institutions, including the church, the crown and the corporation. In a thoughtful history, the Washington Monthly’s contributing editor, Jonathan Rowe, observed:
“The colonists were extremely suspicious of corporations, which were seen as oppressive agents of the crown and potential usurpers of the public will. At the time of the Constitutional Convention, only some 40 business corporations had been chartered in all the colonies. Most of these were for bridges, toll roads and similar public works endeavors. So it’s not surprising the founding fathers omitted the corporation from the scheme of checks and balances by which they hoped to keep institutional power under restraint.”
I will shorthand the ensuing evolution: For a long while, corporate charters were granted selectively for, as Rowe explained, “ventures that seemed worthy of public promotion and support.” Slowly, these institutions grew in number and influence. The most avaricious sought better terms. Individual states found it a handy source of revenue to offer increasingly favorable deals for corporate charters. Incrementally, states reduced the burden of public responsibility.
Delaware finally took the lowest common denominator to zero. Corporations flocked there the way that international shipping companies seek the Liberian flag--a rubber stamp of convenience.
Even high-minded industrialists were forced to play down and dirty. The only responsibility that corporations assumed, in a legal sense, was to themselves. Today, we call this the “fiduciary” responsibility to shareholders, and it is worshiped as business gospel. A corporation that has an opportunity to seek triple-digit profits but does not, perhaps to try and keep the lights on in our schools, could be held in breech of this responsibility.
Might it be another way?
Actually, yes. During the Gilded Age a century ago, when corporations similarly grew tyrannical and lost sight of the idea of corporate citizenship, no less patriots than Theodore Roosevelt and William Taft, both Republican presidents, and Woodrow Wilson, a Democrat, proposed that interstate corporations be chartered in the name of us all at the federal level, not by states, to balance public and commercial interests.
Instead, the United States embarked on regulatory schemes. Lately, as with California and energy production, regulation fell out of fashion. The result has wholly upset the balance and left the nation defenseless against the determined “responsibility” of corporations to turn money into more money, no matter what.
I don’t blame corporations. I blame us. We bought the snake oil. We did it because we thought it would save us money. We thought that by turning energy corporations loose, they would bloody each other and we’d come out with change in our pockets. We were greedy.
How to restore the checks and balances? By tempering our own greed, we can restrain the greed of others. Roosevelt was right. The federal chartering of corporations in the public interest would be a step forward. Corporate responsibility is no more an alien idea than citizen responsibility. It is a founding American ideal. And now, it’s a matter of civic self defense.
Some of the robber barons who wrote themselves $100-million stock bonuses with their gilt fountain pens will squeal, of course. But I personally know more than a few business executives who would be thrilled to take their place and pursue citizenship over perniciousness. They ought to have a chance to prosper in the name of the common good.
