Once upon a time, corporations in the US were not granted personhood and they had to exist under a constant threat of punishments — specifically death and taxes — if they did not obey the laws of the land.

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The Corporate Body:
Liber 118 U.S. 394

by Paco Xander Nathan

I’d like to tell you an almost-completely-true story. Back in 1886, a strange thing occurred: an entirely new species came into being.

A thing not entirely human was declared to hold practically all the rights of a human, or at least all the legal rights of personhood. Something relatively novel… something… fictional. Nonetheless, something capable of human qualities, such as the ability to speak, ownership of property, protection from racial discrimination, participation in the selection of candidates for political office, etc. Humans hardly acknowledge those qualities among species as intelligent as dolphins or gorillas, so this new species gained loads of respect early in its existence.

Now, if you check with the average lawyer on the street, or at least the ones in the luxury SUVs driving down your street, they’ve probably never heard of what happened in 1886. Law schools in the US generally don’t delve into that sort of thing, since it’s not terribly important in practice. Even so, the case of 118 U.S. 394, pitting the County of Santa Clara against the Southern Pacific Railroad, set precedents which notable legal theorists consider to be the greatest legal achievement of the 19^th century.

Not long after the Civil War ended, a greedy railroad company pissed off a small local government while in the process of expanding control over the local economy. The two parties slammed into conflict – not altogether unlike gunfighters in the Wild Wild West. However, in the case of Santa Clara County v. Southern Pacific Railroad (118 U.S. 394), the railroad company pulled a few strings and pushed their grievances into federal court. There the justices ruled in favor of the railroad, rendering an astonishingly bizarre judgment: that a corporation must be regarded as a legal person, since it represents the property of natural persons and acts on their behalf. Voilá! A new species was created, by order of the government of the United States, science fiction publisher extraordinaire.

This twisted legal judgment, in the sheep’s clothing of a mere semantic slight of hand, granted constitutional rights to all corporations based in the US, as means for their legal protection. The heyday of corporate trusts ensued, leading to J.P. Morgan, Standard Oil, and a whole lot more. Unfortunately, along with those rights came none of the typical obligations. For example, just about any person I’ve ever met must live with two inevitabilities: death and taxes. Yet corporations do not necessarily ever "die" and, in many cases, they avoid paying taxes. In another example, when a person takes a life or a large sum of money while committing a crime, they generally face indictment, conviction, imprisonment, parole, or even execution. Since a corporation lacks any physical body, it cannot be placed in prison; this was, in fact, one of the original reasons for creating corporate charters.

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