The three decades following the Civil War saw further increases in the number of corporations and a much more rapid pace of favorable court rulings. Part of the increasing numbers of corporations no doubt came from the great give-away of public lands to some 61 railroad companies. However, even with the huge land grants, the railroads could not live within the conditions set forth by the grants and more than one-third of the land, a total of 190 million acres, was forfeited. Even today, the terms of those grants are being disputed in court cases, most notably in the clear cutting of timber from and the shipping of the raw logs to Asia.
In 1868, the Supreme Court ruled that corporations were not citizens within the context of Article IV Section 2 of the Constitution. Elaborating, the court defined a citizen to apply only to natural persons, members of the body politic, and those owing allegiance to the state. Corporations only had the properties conferred on it by the legislature. Citizenship incurred an obligation of allegiance to the state. The many cartel agreements that American corporations willingly signed with German corporations granted allegiance to the German corporations and hindered both world wars immensely.
In 1876, the Supreme Court ruled in Munn v. Illinois that corporations with a public interest (in this case, the rate grain elevators charged farmers for shipping) were subject to state regulation. The court further ruled that what constituted a reasonable rate was a legislative and not a judicial question. This case is also very similar to a case settled before the Wisconsin Supreme Court. In Attorney General v. Northwestern Railroad, the court ruled that the state could set maximum fares on classes of rail transportation.9
It is important to note here, that Justice Stephen J. Field dissented in Munn. Lincoln appointed Field in 1863 to the Supreme Court in a move that brought the number of justices to ten. Field would serve for another 34 years. It is equally import to note that Field’s opinions were more often at odds with the majority. He had just three concepts of government. One, he felt it was not a function of the government to protect individual liberty. Two, government should be limited (and this fit with his laissez faire economic views). Three, only the U.S. government should have the right to interact with foreign governments. Field first expressed his view that the 14th amendment protected private businesses from government regulation in the Munn case.
In 1879, Judge Lorenzo Sawyer of the Ninth Circuit Court ruled in the Orton case that the federal government had control over the railroad land grants. However, he further restricted state regulation in controlling ulra vires acts of corporations. Stated otherwise, it means that corporate actions go beyond the powers actually granted to corporations. The ruling of the court led directly to settlers being evicted forcibly in the Mussel Slough battle of 1880, in which five settlers were killed. Sawyer is best described as a flatterer of Field, and Field was also involved in this case. Sawyer was involved in several railroad cases that will shortly follow.
In 1882, Sawyer ruled in the San Mateo Railroad case in the Ninth Circuit Court that corporations were persons. Field was likewise involved. However, it is a matter of record that Sawyer owned stocked in the Central Pacific Railroad. Additionally, both Sawyer and Field were close friends of Leland Stanford and other parties involved in the rail cases. Sawyer was uniquely placed to expand the powers of corporations and used unorthodox interpretations of statues and judicial review to do so.
In 1886, the Illinois Supreme Court struck down state Granger laws regulating railroad rates in Wabash v. Illinois. The high point of pro-business judicial activism occurred in 1886. In this year alone, the court struck down 230 state laws passed to regulate corporations. It was also the year of the most grievous act of all in furthering corporate power. This was the year that the court handed down the ruling in Santa Clara County v. Southern Pacific Railroad declaring that corporations were persons under the 15th Amendment. At the very outset of the case Chief Justice, Morrison R. Waite stated:
"The Court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a state to deny to any person the equal protection of the laws, applies to these corporations. We are all of the opinion that it does."
This outrageous ruling has done more to damage our liberty and freedoms than any other single ruling in the history of the country. It in effect gave corporations the same rights as persons, but with none of the obligations and social responsibility carried with those rights. It paved the way for rendering the people subservient to corporations. It is important to note the year this ruling came down corresponds to the height of the robber barons.
Before proceeding further, a closer look at the members of this Supreme Court is needed. This court was undoubtedly the court that was the most agonistic court toward individual freedom and liberty than any other court, with the possible exception of the Rehnquist court of today. Just as the Rehnquist court voided the results of the 2000 election and appointed George W. Bush president, Associate Justice Joseph Bradley of this court cased the deciding vote in giving Rutherford B. Hayes the presidency.
This was the same court that rendered the Civil Rights Act of 1875 invalid in Plessy v. Ferguson. In essence, the court threw out the 14th Amendment in their ruling in applying the amendment to individuals as it was intended. Even more telling of the abusive nature of the court on civil rights was that number of fourteenth amendment cases between 1890 and 1910 only 19 dealt with the Negro while 288 dealt with corporations.
Nor was this court any more friendly to women’s suffrage. In Bradwell v. Illinois, the court upheld an Illinois ruling that denied women a license to practice law as a host of women suffrage and women rights cases followed the passage of the 14th Amendment. In 1886, the Supreme Court Justices were Samuel F. Miller, Stephen J. Field, Joseph P. Bradley, John M. Harlan, Stanley Matthews, William B. Woods, Samuel Blatchford, Horace Gray, and Chief Justice Morrison. R. Waite. The Chief Justice, Waite shared similar views with Field. Waite believed that the first ten amendments applied only to the federal government and were not intended to limit the powers of the various states. Samuel Miller declared that any taxation was robbery in 1874.
The invoking of the 14th Amendment in the Santa Clara case has been ridiculed by later justices. Seventy year later in Connecticut General Life Insurance Company v. Johnson Justice Hugo Black wrote.
"Certainly when the fourteenth amendment was submitted for approval, the people were not told that ratifying an amendment granting new and revolutionary rights to corporations…and were not told that it was intended to remove corporations in any fashion from the control of the state governments. The fourteenth followed the freedom of a race from slavery…Corporations have neither race or color."
William Douglas was another later justice who ridiculed the decision.
In 1890, the Sherman Antitrust Act was passed outlawing contract, combinations, trust or conspiracies, which restrained or monopolized trade. Following passage, the largest wave of corporate mergers yet swept across the country. Section 6 of the act required the forfeiture of any property transported across state lines that fell under the act. Sections 7 and 8 both defined corporations as persons.
In 1890, in Chicago, Milwaukee & St. Paul Railway v. Minnesota the court began retreating from its earlier ruling in Munn. The court now amended its earlier ruling by stating that rail rates were subject to judicial review and due process if set by a commission. A series of cases followed, all with the court favoring a pro-railroad or corporate rulings. In Smythe v. Ames in 1898, the court further extended the ruling to allow for judicial review even if the rates were set by legislature.
In addition, in 1890, New Jersey intensified the race to the bottom
by relaxing its general corporate laws. After this time, New Jersey
would allow corporate charters for holding companies, which permitted
corporations to trade stock of other corporations and to issue their
own stock as payment. In 1892, New Jersey went further by repealing its
antitrust law. In 1896, New Jersey allowed charters to be granted for
any legal purpose and removed any restrictions on mergers. Likewise the
50-year limit on corporate life was removed, and for the first time,
New Jersey would now grant charters to corporations operating outside
its boarders. Shareholders’ rights received a blow as well. Under the
new laws of the state, directors were allowed to amend bylaws without
shareholder approval, and could now rely on proxy voting with all
shareholder meetings held in New Jersey. The new laws were so popular
that between 1897-1904, corporations chartered in New Jersey with a net
worth of $20 million or more increased to 104 from a mere 15 in 1896.
Enough revenue from the filing fees and franchise taxes was generated
to allow the state to abolish property taxes.
In response, Delaware passed a General Corporation Law in 1899 that allowed corporations to write any provisions they wished in creating, defining, limiting and regulating the power of the corporations. This change in Delaware law figures prominently as the reason the du Ponts reincorporated in Delaware.
In 1893, the court issued perhaps its first anti-union ruling in U.S. v. Workingmen's Amalgamated Council. The court upheld an injunction against a union on grounds that the Interstate Commerce Act required carriers to accept freight without discrimination. Also in 1893, corporations were first given the protection of the Bill of Rights in Noble v. Union River Logging Railroad with the ruling that the railroad was denied its 5th Amendment protection when the Department of Interior attempted to remove its approval of a right-of-way over federal lands.
Between 1894 and 1905, a host of anti-labor rulings were issued by the court. Before this time, it was common under state law for the state to limit the number of hours a person was allowed to work. In 1894, the court struck down the eight-hour shift for mechanics and labor in Low v. Rees Printing. Colorado eliminated its eight-hour day for mining and manufacturing by House Bill 203. In 1895, in Ritchie v. People, the eight-hour day was removed for women garment workers. Lochner v. New York eliminated the ten-hour day for bakers in New York in 1905. In 1895, the court ruled that the Sherman Antitrust Act could be used against interstate labor strikes because such strikes were a restraint on trade.
In 1895, the court upheld a monopoly of 98 percent of the country’s sugar protection in U.S. v. E.C. Knight Company ruling that the Sherman Antitrust Act applied only to commerce and not to production. In a dissenting opinion, Justice Harlan wrote that the ruling placed the Constitution in " a condition of helplessness... while capital combines...to destroy competition."
In Hale v. Henkel the court ruled against the corporation’s attempt to use the 5th Amendment, but ruled that overly broad subpoenas for corporate documents could be a violation of the 4th Amendment.
In 1911, the court broke Standard Oil into 33 corporations in Standard Oil of New Jersey v. United States. This case basically ended a short period of generally fair rulings against monopolies and trusts. It was for the most part the climax of the antitrust sentiment started by Teddy Roosevelt. The Clayton Act of 1914 legislated price discrimination within the same industry and further stipulated that labor unions were not trusts.
In 1917, Idaho became the first state to enact criminal syndicalism laws; twenty-three other states soon followed. The laws were used to suppress labor organizers, political activists and foreigners.
The Keating-Owen Child Labor Act was struck down in 1918 by the Supreme Court which ruled that goods produced by child labor did not fall under the Sherman Anti-Trust Act because it only applied to commerce.
Between 1920 and 1924, the court granted corporations the protection of the 4th Amendment ruling that government officers seizing corporate documents violated the provisions against unreasonable searches in Silverthorne Lumber v. U.S and FTC v. American Tobacco. This decision came just as investigations into profit mongering by arms makers during WWI were heating up. Likewise, the decision provided protection for those corporations that signed cartel agreements with I.G. Farben and other German corporations during WWII.
In 1937, the court ruled that Congress could protect interstate commerce from labor organizing in National Labor Relations Board v. Jones & Laughlin Steel Corp.
In the 1938, in the Subcommittee of Federal Licensing of Corporations hearing on Senate Bill 3072 sponsored by Senator Joseph O’Mahoney of Wyoming and William Borah, O'Mahoney argued that "a corporation has no rights; it has only privileges."
In 1947, the anti-union Taft-Hartley Act was passed over the veto of
President Truman. The act declared the closed shop to be illegal,
outlawed secondary strikes and boycotts, allowed employers to exempt
themselves from bargaining with unions if they wished to, forbade the
unions from contributing to political campaigns, and required unions
and their officers to confirm that they were not supporters of the
The Celler-Kefauver Act of 1950 amended Section 7 of the Clayton Act to include the lessening of competition through the acquisition of another company’s assets.
In 1969, the Newspaper Preservation Act was passed. The act specifically exempts newspapers from the antitrust laws. Wholesale consolidation of newspapers followed until only a handful of corporations owned all the major newspapers
In 1976, the second most grievous extension to corporate power was granted to corporations by the court. In Buckley v. Valeo corporations were granted freedom of speech and corporations were now free to contribute unlimited funds to election in effect buying the candidate of their choice. The year 1976 marks the beginning of another long period of pro-corporate rulings, as Republicans were once again able to stack the court with extremely conservative justices.
In U.S. v. Martin Linen Supply Co., a case heard in 1976, the court ruled that corporations may use the 5th Amendment to protect themselves from double jeopardy to avoid a retrial of an antitrust suit. In addition, in 1976 the court ruled that advertising was free speech in Virginia Board of Pharmacy v. Virginia Citizens Consumer Council. In 1977, the court allowed corporations the protection of the 4th Amendment to thwart the efforts of OSHA inspectors in Marshall v. Barlow. In 1977, the court overturned state restrictions on corporate spending on political referendums under 1st Amendment protections in First National Bank v. Bellotti ruling that money was free speech.
After this brief review, it's clear that the founders had just as much fear and loathing of big money (read corporations) as they did of big government. As the state constitutions showed, they chose to restrict corporate activities sharply. The founders certainly believed that a corporate charter was a privilege and conferred no property rights onto the owners of the corporations. In fact, many of the state constitutions granted only charters that were limited by a time duration, after which the corporation would have to be dissolved. Almost all states gave their legislatures the power to revoke a charter if the corporations failed to live within their charter or when their activities were viewed as harmful to the general welfare of the state.
Most states, through general law, further restricted the activities of corporations limiting the amount of wealth or land they could accumulate. It was liberalism is its finest hour protecting the rights of the common man against the plutocrats.
It was only through judicial activism and corruption, along with some state legislatures that eroded most of the laws governing corporations in the 19th Century. This erosion of the law paralleled the rise of a rich elite within our society and also the corporatization of Ameica. Prior to the Civil War most corporations consisted of railroads or banks. It was only after the Civil War that corporations began significant expansion into other businesses. This is the primary reason why so many of the early court decisions and clauses within state constitutions were specific to banks and railroads---other types of corporations were simply insignificant.
It should be clear that the rich elite as a class didn’t begin to emerge until after the Civil War, which paralleled with the court's pro-business rulings that reached a climax with the robber barons of the 1880s. By the end of the 1880s, corporations were granted the rights of personhood by the Waite court. In effect, the judicial system conferred citizenship on corporations without any of the obligations and responsibilities that go with individual citizenship. It leaves us in the precarious position of capital (money) having more rights than that of the owner of the capital.
One good example of corporate having the rights of a person without the obligations was during WWII when individuals could be drafted and forced to serve their country. Initially after the bombing of Pearl Harbor the army was overwhelmed with volunteers. However, throughout five long years the army relied on the draft to maintain the army's strength, but the critical factor was a shortage of supplies. Moreover, the supplies and orders for munitions and armaments were slow to come. Corporations refused to produce war munitions in favor of consumer goods. In effect, corporations engaged in a sit-down strike until they had obtained outrageously beneficial terms. America faced corporations that openly violated the law, corporations that blackmailed the government with threats of an interruption of the supply of gasoline and corporations that conspired to price fixing. Finally, America faced the armies of the Third Reich supplied by products built by American corporations. No corporation ever faced charges of price fixing, war profiteering and treason with supplying the enemy with munitions. Yet more than three hundred corporations did business with the Third Reich during the war.
Certainly, the record of the Waite court with its many antagonistic rulings toward the civil rights of individuals and their liberties, along with an extremely pro-business agenda spanning a period of almost 30 years should give us pause today---especially with the present Rehnquist court quietly chipping away at the Miranda ruling and other civil rights rulings. Likewise, it was the Rehnquist court that ruled that some ballots in Florida were more equal than others and need not be counted, thereby throwing the 2000 election to George W. Bush just as justices from the Waite court installed Rutherford B. Hayes as president earlier. Such outrageous rulings should call into question the confirmation procedure used in the Senate for court appointments. All too often justices are chosen for their political ideology rather than their judicial abilities.
The erosion of protections from corporations built into the various
state constitutions has led to the present problems we are facing. Our
government is for sale to the highest bidder. The erroneous decision of
the court in 1976 equating money with free speech has left us with
unequal rights. A citizen’s voice is not equal to that of a
multinational corporation simply because the corporation has unlimited
financial resources to apply. Further, the court has allowed
corporations to grow to gargantuan proportions, precisely the fear
Jefferson expressed in his opposition to national charters.
In 1996, 51 of the world’s largest economies were corporations with General Motors larger than Denmark, and Wal-Mart, the twelfth corporation larger than 161 countries. The top 200 corporations in the world have sales equivalent to 28.3 percent of the world's GDP. The combined sales of these top 200 corporations are larger than all but the world’s nine largest countries. These top 200 corporations employ 18.8 million people or less than one-third of one percent. The world top five employers are General Motors, Wal-Mart, PepsiCo, Ford and Siemens.
Domestically, the top one percent of Americans owns 40 percent of all U.S. assets. The corporate share of income taxes has fallen from roughly 40 percent in the 1940s to less than 15 percent today. While corporate profits rose an astounding 130 percent from 1980 to 1995, the average family saw a net decrease in their real wage. The problem was first detailed in America: What Went Wrong? written by Barlett and Steele for the Philadelphia Inquirer in 1992 and now available in paperback.
In the abbreviated list of court rulings and acts of Congress above, the list stopped at 1987. For one, the focus of corporate regulation changed; an era of extreme conservatism gripped the nation. Carter began deregulation of a few industries to prop up a sagging economy feeling the after-effects of OPEC. In the 1980 presidential race, Reagan ran on a platform of deregulation. If Carter began limited deregulation, the Reagan administration threw open the flood gates. The last dying gasp in favor of regulation of corporations came in 1984 when the judge ordered AT&T to be broken into eight Regional Bells in an ongoing monopoly case.
Coupled with the earlier grievous court ruling of equating money as free speech and the reduction in the top tax rates for individuals and corporation, corporations were free to buy the politicians of their choice. The results have been a host of new bills enacted by Congress granting corporations more corporate welfare, fewer regulations, more power and more rights. With the top tax rates reduced to a mere 31 percent, corporate executives soon reaped the benefits of exorbitant salaries and benefits at the expense of the employees. Employees became expendable and a new industry was born overnight: the temporary employment firms. Meanwhile the CEOs of corporations sought control of corporate boards, further increasing their empire and concentrating their power.
The result of the deregulation of the 1980s and 1990s is literally punctuated with dismal failures. The era is marked in the beginning by a multi-billion dollar taxpayer bailout of the savings and loan industry. For much of the 1980s, the savings and loan bailout was a black hole for taxpayers’ hard earned dollars. The industry had been deregulated and had gambled on high-interest junk bonds and foreign loans. When the junk bond market collapsed along with the foreign loans the industry was devastated. Fallout from the resulting carnage lead to the Keating Five and the Michael Milken trials. Keating lobbied Congress heavily promoting deregulation of the savings and loan but in the end Lincoln Savings and Loan went bankrupt, as did the reputation of the five congressmen most heavily involved with Keating. Milken, the junk bond king faced a 98-count indictment.
The end result of the savings and loan scandal and the junk bond scandal went far beyond the taxpayer bailout. The junk bonds were used to finance leveraged buyouts, further concentrating power in fewer hands. In addition, many investors in junk bonds found themselves empty-handed with worthless paper or, if they were lucky perhaps saw their investment reduced to fifteen cents for every dollar invested. In the end, none of the perpetrators of the failed savings and loans faced serious sentencing. Milken was fined heavily and sentenced to a short prison term. His fortune was somewhat reduced, but he was still a multi-millionaire.
Evidence exists that in 1988, presidential candidate George Bush was
implicated in delaying the closure of Silverado Savings and Loan until
after the election, because his son Neil was on the board.10
Perhaps the most damaging aspect of the junk bond fiasco was the spawning of a mania of mergers. Even more than a decade later, mergers are continuing unabated. Just as Barlett and Steele detailed in 1992, mergers have continued. The large corporations that received tax bonanzas from the Reagan administration under the disguise that lower taxes would spur growth didn’t invest their newfound wealth in research instead they bought out smaller corporations. Moreover, with each new merger and buyout, power and wealth was concentrated. For the employees, it meant massive layoffs. Congress and the Justice Department have both been comfortably asleep at the wheel, allowing corporations broken apart to re-merge together as in the case of a couple of the "Baby Bells" and Exxon and Mobil.
Another of the first industries to be deregulated was the airlines. Deregulation of the airlines has only been marginally successful, if at all. Yes, fares did come down, but at the very high price of safety. Delays are more likely than on-time departures and arrivals. Luggage is lost or damaged all too frequently. It is now commonplace to hear of another airline crash with possibly a hundred or more deaths resulting. Yet studies of airplane crashes reveal that most deaths are not the result of the impact. Rather the deaths are the result of excessively weak seats. On impact, the seats tear loose and the passenger is propelled forward at 120 mph. The lucky ones may indeed be those killed when they are thrown against the bulkhead. More often than not limbs or spines are shattered and unable to move they perish in the flames or from the toxic fumes. The FFA has known for years of the weak seat design. In fact, the seats in a Honda Civic or Yugo are stronger. Car seats generally are capable of standing up under the strain of 20-G forces; those on the airlines are only 9-Gs.11 Now how is that for deregulation?
However, the FFA was hobbled from the very beginning by Congress with a dual mandate, one to regulate the industry and two to promote the industry. Only after the crash of Valu Jet did congress change this dual mandate. Nor is it proper to place the blame on the FFA alone for air safety problems. The real problem lies with a Congress that creates a toothless agency to placate the public. Why does the agency need a Congressional bill to require stronger seats? A regulatory agency should be allowed to implement reasonable controls over its charges. However, time and again, Congress will create an agency as a response to a problem with little or no authority to complete its mission.
Two other examples are the EPA and OSHA, where in recent years Congress has blocked planned implementation of stronger new standards. In the case of the EPA, it was the fine particulates. In the case of OSHA, it was new standards for repetitive motion. In short, these two agencies have been used by the Republicans for political football. Nixon used both against his political enemies. The Reagan administration made a mockery of the EPA by appointing a former employee of the Coor’s family, as well as that of the entire Department of Interior headed by James Watt.
The Reagan transition team in 1980 went far beyond the normal bounds of corruption. Reagan turned a blind eye toward ethics when it concerned his transition team. By far, Reagan assembled the largest transition team of any president thus far. Many had obvious conflicts of interests, nor did the requests from various members of Reagan’s team stop within prescribed guidelines. Carter appointees refused to turn over lists of prospective enforcement cases to a member of the transition team (who just happened to be an independent oil producer) and his deputy (whose firm represented Standard Oil of California). At the Labor Department Reagan’s deputy team leader had filled a friend of the court brief with the Supreme Court challenging the enforcement of OSHA laws. Such confrontations were visible in every department. In short, Reagan’s transition team was given a license to loot on behalf of their corporate benefcators.12
Ever since the erroneous Supreme Court decision to equate money with free speech, politicians have been placed in the pocket of corporate America. Campaign finance was an issue in the 2000 elections and remains an issue in Congress despite the best efforts of George W. Bush and the leaders of the Republican Party to kill campaign finance reform. The Bush administration is rabidly pro-business as evident from his appointment of Gale Norton to head of the Interior Department. Norton was a protegee of none other than James Watt. Additionally, Bush has shown his allegiance to corporate America in the California electrical power shortage.
This leaves the American citizen as a pawn of corporate America. While the corporate media blares report after report of crime in the streets the real crime story of corporate fraud goes unreported. In 1998, the FBI estimated the annual cost of robberies and burglaries at $3.8 billion. The annual cost of corporate or white-collar fraud has been placed in the hundred billion dollar range (note the FBI does not estimate corporate or white-collar fraud). The estimates of healthcare fraud alone was placed at between $100-$400 billion dollars. Securities fraud is in the minor leagues at only $15 billion dollars.13 The two figures point out one glaring and unmistakable fact: regulation works. The securities market is tightly regulated, while healthcare field is wide open with little effective regulation and what does exist, exists primarily on the state and local levels. The Savings and Loan scandal alone cost U.S. taxpayers between $300 to $500 billion dollars.
The FBI also reported in 1998 that 19,000 Americans were murdered.
In contrast 56,000 Americans died from job-related diseases such as
black lung. No estimate is even available for the number of Americans
whose lives were cut short from cancer due to environmental pollution
or workplace exposure. Federal contractors routinely violate the Wagner
Act and other laws, but are still allowed to continue to provide
However, Americans (and indeed all of the world’s people) face and even greater threat to their freedoms. The threat comes from the attempt to take fascism world wide through the WTO and so-called free trade agreements. Free trade between nations is beneficial to all. However, free trade means one thing and one thing only a reduction in or elimination of tariffs. Any trade agreement that goes beyond those boundaries is just another step towards global fascism and corporate rule.
In free countries, the laws are determined by the people or representatives of the people they are not set by some corporate fiat. However, that is not the case with the recent trade agreements such as GATT, NAFTA, the now defeated MAI or the present negotiations on GATS. All of these so-called trade agreements contain provisions that either overwrite exiting labor and environmental laws or mandate payment to any corporation that perceives itself to be injured by public policy, the laws of a sovereign nation or both. Further, these so called free trade treaties set up corporate tribunals as the final arbitrator in any disputes rendering the court system and national sovereignty mute. In essence these free trade agreement confer sovereign status onto corporations.
For instance under GATT, the United States was forced to accept shrimp imports from Thailand. The imports had been banned under U.S. law because Thailand law did not require shrimpers to use protective nets for sea turtles.
Presently the US is bound by NAFTA to begin allowing Mexican tractor-trailer rigs to enter the country unrestricted. At best, the only protection ensuring these rigs to be up to U.S. safety standards comes from state highway patrols.
However, under these so-called free trade agreements Canada and Mexico have both suffered more grievous blows. Under NAFTA, Canada was forced to pay a multimillion dollar ransom to US based Ethyl Corporation. In 1997, Ethyl sued Canada under the provisions in Chapter 11 of NAFTA. Canada had the foresight to ban the hazardous and toxic MMT gasoline additive. Ethyl claimed that such a ban on MMT constituted an expropriation of its assets in Canada and sought $250 million dollars in damages. In 1998, the Canada government under extreme pressure removed the ban on MMT and settled the suit with Ethyl for $13 million dollars.14
Mexico suffered a similar indignity in 1996. The Mexican state of San Luis Potosi refused to give U.S. based Metalclad Corporation a permit to reopen its waste disposal site. The state governor ordered the site to be closed after a geological survey showed that the site would contaminate the local water supply. The governor then went further by declaring the site part of a 600,000 acre ecological zone to protect the water supply. Metalclad sued under Chapter 11 of NAFTA, seeking $90 million in compensation. Eventually the case was settled with an award to Metalclad for $17 million dollars. Under GATS, Mexico would have faced additional trade sanctions.
Both the Canadian and Mexican cases demonstrate the awards were granted under a tribunal set up under NAFTA. The tribunal is, of course, beholding only to the multi-national corporations. Canadian or Mexican courts and laws were voided in both cases.
Incredibly, under the rules of the current talks on GATS, (General Agreement on Trade in Services) injustices such as the two cases listed above would expand. GATS could prevent Canada from expanding its Medicare program to include national drug or home care program.15 Such expansion of Canada’s healthcare system could trigger suits such like the Ethyl or Metalclad suits discussed above.
GATS defines services very broadly. Under GATS, the following would be classified as services:
business services, communication services, construction services, distribution services, financial services, recreation, tourism and travel, transport services, education, health services, water supply, electricity supply, waste disposal16
Under the terms of GATS any expansion of the National Park System could trigger a lawsuit forcing the taxpayer to pay some multinational corporation millions. Likewise, any expansion of a city’s public water supply or waste disposal would likewise trigger lawsuits, as would cities that chose to implement a light rail system to ease traffic congestion. Further, under the current rules of GATS, any increase in funding or expansion of additional programs in our public schools would trigger lawsuits. Under all cases, the suits would be brought before a tribunal established by GATS without regard to the U.S. court system.
Presently, even in the current slump in the U.S. economy over one trillion dollars was invested in other countries. The danger posed by the multinational corporations is immense and very real. The present trade agreements have little to do with increasing trade. In fact, the trade agreements' sole purpose is aimed at eliminating any risk of capital by including provisions requiring compensation for government actions to protect the public and enhance public policy. They are, in effect, the first steps to establishing global fascism by overwriting the laws of sovereign countries to establish a corporate-ruled world.
The proposed MAI treaty was killed and is effectively dead for now. However, the WTO is still active and MAI has now been replaced with a treaty that is just as dangerous, GATS. Calling such treaties free trade agreements is nothing more than using a feel-good euphemism keyed to generating support and cloaking the real danger hidden in these agreements. There is only one sure method of ensuring that such agreements are killed for all time, a constitutional amendment that restricts the activities of all corporations. Under our present constitution, Congress has been given the sole authority in regulating interstate commerce. Such authority could be used to require any corporation to obtain a corporate charter that would be limited by the proposed amendment found in the last chapter.
The erosion of laws governing corporations and the new rounds of trade talks have placed the people of the United States and the entire world in jeopardy of losing their freedoms to global fascism of corporate rule. Franklin Roosevelt described fascism best.
"The liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic State itself. That, in its essence, is Fascism -- ownership of government by an individual, by a group or by any controlling private power."