Every time there’s some mess in the United States regarding the nomination of judges, someone brings up the Founding Fathers of the nation and what they intended in the Constitution. The Matrix radio station in Wellington, New Zealand (107·5 MHz) has been doing its rounds with American history of late and it may be worth remembering just what the Founding Fathers thought of corporations.
   As summarized at Norma Sherry’s site:

Before our independence, the [Americas] were governed by Britain. Two companies, the East India Tea Company and the Hudson Bay Company[,] ramrodded their will upon the businessman and in actuality were the true rulers of the early colonists. As for Great Britain, it was distracted in numerous battles and wars with countries in Europe. Not until its victory in 1763 with France in the Seven Years’ War, or the French and Indian War, did Britain give the [Americas] the full weight of its attention.

   The East India Tea Company was a corporate abuser and had Parliament enact laws so it could have a monopoly on tea. With this fresh in mind, the constitutional conventions took place. (The same Company later demanded that in exchange for Chinese tea, it would trade opium rather than currency or metals—and tried to get as many Chinese hooked on drugs as possible. When they could not sail in during the Opium War, the American Forbes family did.)
   While Benjamin Franklin and one other supported the idea of corporations—at least for creating projects for the public good—others opposed it. I hope Ms Sherry permits me to cite a slightly bigger chunk this time (my emphasis):

It is the accumulation of disgust for the corporate mentality that prompted Thomas Jefferson to proclaim, “I hope we shall take warning from the example of England and crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our Government to trial, and bid defiance to the laws of our country”[.]
   Therefore, when our founding fathers deliberated on the text and content of our Constitution, the despicable maneuverings of the East India Tea Company and other British corporations favored high in their collective memories. This new country was going to assure corporations would know their place.
   … In the beginning, and for many years of the United States of America, corporations could exist only if they were granted a charter by the state in which they would conduct business.
   … Charters were issued with the combined approval of the citizenry and the legislators. … Rules were clearly defined and any deviation would result in the revocation of the charter; likewise, if their operating conditions were unacceptable, this too would result in the loss of their charter. If the corporation was dissolved its assets were divided among its shareholders.
   … Incorporated businesses were not permitted to land holdings or make any political contributions or attempt to influence legislation. They could not purchase or own stock in other corporations. They were strictly and explicitly charted for the purpose of serving the public interest.

   To put it in modern parlance, corporations could only exist with a charter and strict corporate social responsibility. I understand the American railroad was born with such corporations (though one could debate the operating conditions for workers), and when one examines the growth of Japan and Korea, there were notions of lifetime employment, with constant innovation as the means through which that could be achieved.
   So while we dig out constitutional conventions and argue the Founding Fathers for everything from filibusters to the appointment of US Cabinet members, we don’t seem to dig them out too often when there are corporate abuses and scandals.
   Yes, the laws have changed since these formative steps, but we ignore their origins at our peril. Just as America was formed because of a chasm between the ruling class and everyday people, some corporations—not just American ones—may cause history to repeat itself. The battle, this time, will not be fought over nations, but markets.
   The more word of abuses get out, the more likely consumers will react against the perpetrators. And in some cases, the solutions are so simple: an extra quarter-dollar on a pair of shoes, compliance with basic laws on employee welfare. For consumers now expect corporations to reflect their values, just like they were meant to in the beginning—why else is BP telling people that it is installing solar panels in some stations and reusing water from its car washes? And if they find out the promise has been broken, wait for it to spread on emails virally, or for it to appear on blogs. Keep the promise and watch dividends grow, as well as customer bases in unexpected places—the places that one has helped.

Del.icio.us tags: corporations | history | USA | CSR | social responsibility Posted by Jack Yan, 04:37  permalink

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