Financial History Issue 128 (Winter 2019) | Page 41

BY MICHAEL A. MARTORELLI   forever altered, through the growth of the consumer economy in the 1920s, the Great Depression, FDR and World War II. The post-war economy was a paradise for most in America, with rising wealth and predictable tax and regulatory frame- works. Managerial science became a per- manent feature of American corporations. But, argue the authors, there was a bit of laziness with companies discounting the growth of foreign competition, and scrimping on new processes for quality and manufacturing excellence. The ’70s was a reckoning of sorts, with rising infla- tion and little growth. Reaganism was the antidote, lowering taxes and reducing regulation. Ultimately, we arrive at the Great Recession, and there is a good explana- tion of how the interlocking pieces of the financial system melted down. What responsibility does Mr. Greenspan bear for the crisis? It is unclear, according to him (pp. 384–5), that a change of policy at the Fed would have slowed the asset bubble. Since we are still arguing about the Great Depression, I guess this debate won’t end anytime soon. The book concludes with an admoni- tion: we are at risk of losing our capitalis- tic dynamism, the authors warn. To keep it requires action: slowing entitlement growth, reducing heavy handed regula- tion and encouraging the return of more sturdy, less “sugar-candy” personal char- acter traits. This is a thoughtful and enter- taining book, and it provides a needed reminder that American capitalism, for all its faults, has created more wealth for more people than any other approach. “Socialist paradises” haven’t worked out that well.  James P. Prout is a lawyer with 30+ years of capital market experience. He is now a consultant to some of the world’s big- gest corporations. He can be reached at jpprout@gmail.com. We the Corporations: How American Businesses Won Their Civil Rights By Adam Winkler Liveright, 2018 496 pages $28.95 Adam Winkler’s history of American businesses’ quest for their civil rights is not just about the emotionally charged term of “corporate personhood”, but about Amer- ican corporations’ long-term pursuit of many constitutionally guaranteed protec- tions. The Supreme Court was first asked to deal with the notion of corporate rights in 1809; it was not pressed to adjudicate the civil rights of African Americans and women until 1857 and 1879, respectively. Over the last two centuries, those groups and other minorities not thought to be included among “We the People” in 1787 have benefitted from court decisions, leg- islative changes and popular social move- ments while seeking their fair share of rights. In contrast, corporations have relied solely on arguments before the Supreme Court to assert a limited but powerful assortment of protections. Readers will be familiar with some late 20th and early BOOK REVIEW 21st century Supreme Court decisions that expanded corporations’ rights in several areas. They probably will not be as conver- sant with other 19th and 20th century deci- sions that first addressed the issue. Winkler, a UCLA law professor, initially notes that America was first colonized by corporations. It may be too big a leap to suggest that America was a corporation. But it is a fact that The Virginia Company, The Massachusetts Bay Company and the Connecticut Colony were all profit-seek- ing corporations, albeit with elements of governance built into them. The writers of the Constitution did not acknowledge the corporate form of existence in that document. However, as early as 1809 the Supreme Court found that a corporation (The Bank of the United States) had the same right as an individual citizen to bring a lawsuit (against Georgia’s tax collector) in federal court. In 1819, the Court further ruled that a corporation (Dartmouth Col- lege) was a private entity, and that a state (New Hampshire) had no right to change an existing contract between a corporation and a third party (the King of England). During the next few decades, lawyers seeking additional rights for corporations appealed numerous lower court rulings to the Supreme Court. While probing the innovative theories in many of those cases, Winkler acknowledges the Court’s rejec- tion of both monopoly privileges in 1837 and corporations’ “privileges and immuni- ties” protections in 1839. He suggests those rulings reflected strongly the leadership of Chief Justice Roger Taney (1836–1864), who consciously tried to narrow, refocus and reject the protections of corporations as adjudicated by Chief Justice John Mar- shall’s court from 1801 to 1835. Corporations’ search for additional rights scaled a new mountain in 1886. Winkler details the full story behind Supreme Court Reporter of Decisions J.C. Bancroft Davis’ addition of a controversial statement to the headnote to the Santa Clara County v. Southern Pacific Rail- road case. In one of the most famous mischaracterizations of all time, Davis’ assertion led Chief Justice Morrison Waite to open that case by stating that the jus- tices believed that the 14th Amendment’s www.MoAF.org  |  Winter 2019  |  FINANCIAL HISTORY  39