Unequal Protection: Thom Hartman

Thom Hartman’s book,Unequal Protection is being published on Truthout. This is the second of his books that have been published at Truthout.

“Unequal Protection”: The Boston Tea Party Revealed

Tuesday 12 April 2011
by: Thom Hartmann, Berrett-Koehler Publishers

They [those who wrote and signed the Declaration of Independence] meant to set up a standard maxim for free society, which would be familiar to all, and revered by all; constantly looked to, constantly labored for, and even though never perfectly attained, constantly approximated, and thereby constantly spreading and deepening the influence and augmenting the happiness and value of life to all people of all colors everywhere. The assertion that “all men are created equal” was of no practical use in effecting our separation from Great Britain; and it was placed in the Declaration not for that, but for future use. Its authors meant it to be—as, thank God, it is now proving itself—a stumbling block to all those who in after times might seek to turn a free people back into the hateful paths of despotism.

—Abraham Lincoln, speech in Springfield, June 26, 1857, commenting on the Dred Scott decision of the U.S. Supreme Court

As Abraham Lincoln biographer Albert J. Beveridge noted in 1928:

Facts when justly arranged interpret themselves. They tell the story. For this purpose a little fact is as important as what is called a big fact. The picture may be well-nigh finished, but it remains vague for want of one more fact. When that missing fact is discovered all others become clear and distinct; it is like turning a light, properly shaded, upon a painting which but a moment before was a blur in the dimness.[1]

There is such illumination in learning, for example, that in 1886 the Supreme Court had not, in fact, granted corporations the rights of persons— or in discovering that the battle between working people and what Grover Cleveland called the “iron heel” of corporate power was actually at the core of the American Revolution.

While the Pilgrims were early arrivers to America, and their deeds and experiences make outstanding folklore, they weren’t the country’s founders. This country was formally settled nineteen years before the pilgrims’ arrival, when land from the Atlantic to the Mississippi was staked out by what was then the world’s largest transnational corporation. The Pilgrims arrived in America in 1620 aboard a boat they chartered from that corporation. That boat, the Mayflower, had already made three trips to North America from England on behalf of the East India Company, the corporation that owned it. By the early- 1600s colonization of North America, the British Empire was just starting to become a world empire.

This chapter is part of an exclusive Truthout series from Thom Hartmann, America’s No. 1 progressive radio host and bestselling author of 21 books. We are publishing weekly installments of the bestseller, “Unequal Protection: How Corporations Became ‘People’ – and How You Can Fight Back.” Please join us as Hartmann explores the evolution of corporate personhood, gaining insight into the nature of democracy. To read more chapters, click here.

A century or so before that, as western European nations extended their reach and rule across the world in the 1400s and 1500s, England was far from being a world power. Following a series of internal battles and wars with Scot- land and Ireland, as well as power struggles within the royal family and with the Catholic Church, England at that time was considered by the Spanish, French, and Dutch to be an uncultured tribe of barbarians ruled by sadistic warlords.

Although Sir Francis Drake is touted in British history as a heroic explorer and battler of the Spanish Armada, as a treasure hunter and privateer he was in reality a de facto licensed pirate, and even in the late 1500s England lacked a coherent naval strategy or vision.

The British first got the idea about the importance of becoming a world power in the late 1400s when they observed the result of Christopher Columbus’s voyage to America—he brought back slaves, gold, and other trea- sures. That got Europe’s attention and threw Spain full-bore into a time of explosive boom. Then, in 1522, when Ferdinand Magellan sailed all the way around the world, he proved that the planet was a closed system, raising the possibility of tremendous financial opportunity for whatever company could seize control of international trade.

In many of the European countries, particularly Holland and France, consortia were put together to finance ships to sail the seas.

England got into the act a bit late, in 1580, with Queen Elizabeth I becoming the largest shareholder in The Golden Hind, a ship owned by Sir Francis Drake. She granted him “legal freedom from liability,” an early archetype for modern corporations.[2]

The investment worked out very well for Queen Elizabeth. There’s no record of exactly how much she made when Drake paid her share of the Hind’s dividends, but it was undoubtedly vast, since Drake himself and the other minor shareholders all received a 5,000 percent return on their investment. Plus, the queen’s placing a maximum loss to the initial investors of their investment amount only made it a low-risk investment to begin with. She also was endorsing an investment model that led to the modern limited-liability corporation.

The queen also often granted monopoly rights over particular industries or businesses in exchange for a fee. The 1624 Statute of Monopolies did away with this ability of the crown, although in the years thereafter the British government used tax laws to produce a similar result for the corporations favored by Parliament or the royal family.[3]

Limiting Risk by Incorporating

A business can operate at a profit, a break-even, or a loss. If the business is a sole proprietorship or a partnership (owned by one or a few people) and it loses more money than its assets are worth, the owners and the investors are personally responsible for the debts, which may exceed the amount they originally invested. A small-business owner could put up $10,000 of her own money to start a company, have it fail with $50,000 in debts, and be personally responsible for paying off that debt out of her own pocket.

But let’s say you invest $10,000 in a limited-liability corporation, and the corporation runs up $50,000 in debts and then defaults on those debts. You would lose only your initial $10,000 investment. The remaining $40,000 wouldn’t be your concern because the amount of your investment is the “limit of your liability,” even if the corporation goes bankrupt, defaults in any other way, or causes millions of dollars in damage to the environment or even the deaths of people.

Who foots the bill? The creditors—the people to whom the corporation owes money—or the community that was devastated. The company took the goods or services from them, didn’t pay, and leaves them with the bill, exactly as if you had put in a week’s work and not gotten paid for it. Or it wreaks havoc and death and then simply shuts down, as so many asbestos companies have done recently.

And if the corporation declares bankruptcy and dissolves itself, there is nobody for the creditors to go after. That’s the main thing that makes a corporation a corporation, and it’s why in England the abbreviation for a corporation isn’t Inc., as in the United States, but Ltd., which stands for limited-liability corporation (which is also used in the United States and other nations).

If you were a stockholder in a corporation that went under, it wouldn’t even be reflected on your personal credit rating (unless you had volunteered to personally guarantee the corporation’s debt). Your liability is limited to how- ever much you invested.

Moreover, a corporation can outlast its founders. If you started a one- man glassblowing business, for example, when you die or can’t work anymore, the income stops. But a glassblowing corporation is an entity unto itself and can continue on with new glassblowers and managers after the founders move on. The implication, of course, is that a corporation can pay profits as a divi- dend to its shareholders for centuries, theoretically forever.

This is what Queen Elizabeth had in mind. Incorporating The Golden Hind would limit her liability and that of the other noble and lesser noble investors and maximize their potential for profit. So after the big bucks she made on Drake’s expeditions on The Golden Hind, she started pondering what could be done about the small role England played in world trade relative to Holland, France, Spain, and Portugal.

In part to remedy this situation and in part to exploit a relative vacuum of power, she authorized a group of 218 London merchants and noblemen to form a corporation that would take on the mostly Dutch control of the global spice trade. They formed what came to be the largest of England’s corporations during that and the next century, the East India Company. Queen Elizabeth granted the company’s corporate charter on December 31, 1600.[4]

The East India Company Builds England…and America

. . .   . . .    . . . More at Truthout

Continue to read at TruthOut


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