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Excerpts from Gangs of America: The Rise of Corporate Power and the Disabling of Democracy, by
Ted Nace, Berrett-Koehler Publishers, Inc., 2003
Chapter 2 – From Street Fights to Empire: The British roots of the American corporation (1267 –
1773)
p. 20 Medieval craft guilds had originally been “commonalities,” in which all members were equal. But
over time a stratification occurred, with the elite members of each guild assuming uniforms known as
liveries. In time, nonliveried members were shut out entirely, and eligibility for membership was
determined not by competency at a craft but by ability to pay a fee of capital.
p. 22 Meanwhile, as the livery guilds continued to joust with the monarchy over who would ultimately
control the innumerable revenue streams produced by the English economy, growing international trade
had begun to transform some of the guilds into the first actual business corporations…. Certain types of
infrastructure, such as wharfs, convoys, and overseas embassies, were used by all the members of the
Merchant Adventurers, and this shared infrastructure needed to be developed jointly and financed out of
pooled capital. This was the starting point for one of the key features that distinguished corporations from
guilds: the pooling of capital.
p. 24 With pooled capital, the corporation for the first time became a single unified entity rather than a
federation of independent merchants. This internal consolidation made the joint-stock corporation ideally
suited for the emergence of a key defining principle of the corporate form: the idea that a corporation
represents a separate legal entity from its owners.
Chapter 4 – Why the Colonists Feared Corporations…: In which the citizens of Boston
demonstrate the use of the hatchet as an anti-monopoly device (1770 – 1773)
p. 39 To a surprising degree, the American Revolution was directly and explicitly an anticorporate revolt.
Part of the backdrop for that revolt was the long-standing anticorporate sentiment among lower-class
people such as indentured servants and conscript sailors…. [A]nticorporate views also became common
among both French and English intellectuals, and some of those thinkers influenced cosmopolitan
Americans such as Benjamin Franklin. Among British and French thinkers, corporate enterprise was
considered synonymous with monopoly – a way for privileged elites to profit at the expense of the general
public. p. 40 Merchant resentments about British rule centered on concrete economic issues. p. 41 And
then came the Boston Tea Party, the event that triggered a severe British crackdown, which in turn
precipitated the American move to declare independence.
Chapter 5 - …And What They Did About It: How the framers of the American system restrained
corporate power (1787 – 1850)
p. 48 The system that emerged for chartering corporations in America after the Constitutional Convention
flipped the English system upside down. Instead of the monarch using corporate charters to grant special
monopoly privileges to men of wealth, the American system placed the chartering function in the hands of
the various state legislatures. Furthermore, it put the emphasis on restrictions and accountability
measures rather than on privileges.
p. 55 Beginning in the 1850s, and particularly after the Civil War, legislators sympathetic to the wishes of
the rapidly growing railroad corporations effectively dismantled the restrictive features of the charter
system, replacing it with a nonrestrictive system of automatic chartering known as “general incorporation.”
By the 1880s the old system was in near collapse, and by 1900 it had effectively vanished.
Chapter 7 – Superpowers: The corporation acquires nine powerful attributes (1860 – 1900)
p.71 [T]he corporation of 1900 was quite different from the corporation of 1860.
p. 72 Change #1: Creating Corporations Gets Easier
p. 73 Change #2: Corporations Acquire an Unlimited Life Span
p. 75 Change #3: Corporations Learn to Shape-Shift [i.e. re-name, sell off divisions, be taken over and
absorbed, etc.]
p. 76 Change #4: Corporations Gain Mobility [e.g. have legal location in a different state, wherever
chartering provisions are most favorable]
Book summary courtesy of the Progressive Women’s Alliance of West Michigan.
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p. 77 Change #5: Corporations Become More Adaptable [e.g. conglomerate, vertical integration]
Change #6: Corporations Shed Their “Conscience” Mechanisms [doctrine of limited liability]
p. 79 Change #7: Unleashing the Corporate Will [elevation of the power of management]
p. 80 Change #8: Removing Restrictions on Size
p. 83 Change #9: Corporations Win Constitutional Rights
Chapter 8 – The Judge: Stephen Field and the politics of personhood (1868 – 1885)
p. 96 Field’s strategy had two pieces: first, to undermine the idea that the Fourteenth Amendment was
intended only to help the emancipated slaves, and second, to assert that corporations were entitled to
Fourteenth Amendment protection.
Chapter 9 – The Court Reporter: Who really decided the Supreme Court’s most important
corporate case? (1886)
p. 102 Santa Clara [County v. Southern Pacific Railroad] was decided by the Supreme Court in favor of
the railroad, and it gained mythic status in American political culture as the decision by which corporations
won personhood status under the Fourteenth Amendment…. In fact, the ruling issued by the Court in the
case didn’t say anything at all about corporate personhood.
p. 103 Chief Justice Morrison Waite made a comment from the bench that seemed to endorse the view
that corporations are persons for purposes of the amendment. The court reporter, J.C. Bancroft Davis,
incorporated those verbal comments into the statement of facts. And in the syllabus (the court reporter’s
summary of the case), he highlighted Waite’s verbal “personhood” comment as the main point of the
case.
Chapter 11 – Survival of the Fittest: “People power” versus a social Darwinist agenda (1886 –
1937)
p. 129 Despite Holmes’s eloquent opposition, the Court remained on its social Darwinist streak until the
late 1930s. Central to the Court’s prevailing ideology during this period was an almost religious worship of
the sanctity of contracts…. Of course, making this idealized model the central concept of employeeemployer relations requires that one ignore the reality that a huge corporation and an individual worker
don’t enjoy anything even roughly resembling equivalent negotiating power.
p. 135 … [President] Roosevelt banished from the public discourse the social Darwinist vision. His
genius was in devising the win-win solution: the idea that a well-paid, socially secure workforce was
entirely compatible with a huge expansion in corporate activity and profits.
Chapter 12 – The Revolt of the Bosses: The new mobilization of corporate political power (1971 –
2002)
p. 137 [Lewis Powell, Jr., one of the most well-connected corporate attorneys in the country, wrote a
memo to the U.S. Chamber of Commerce describing his view on the malaise afflicting corporate America
and the steps he felt the Chamber should take to reverse the slide in the political fortunes of business.
The memo was titled “Attack on American Free Enterprise System.”] p. 138 Two months after writing it,
Lewis Powell was nominated to the Supreme Court by President Nixon, placing him in an incomparable
strategic position to advance the goals expressed in the memo.
p. 142 [A]n unprecedented wave of political organizing began among business executives…. The most
important development came in 1972 [with the] formation of the Business Roundtable, an organization
made up exclusively of CEOs from the top two hundred financial, industrial, and service corporations.
p. 143 Alongside and in the wake of the Roundtable, the 1970s saw the creation of a constellation of
institutions to support the corporate agenda, including foundations, think tanks, litigation centers,
publications, and increasingly sophisticated public relations and lobbying agencies.
Chapter 13 – Speech = Money: Using the First Amendment to block campaign finance reform
p. 154 In cases where corporate opponents of citizen initiatives spend at least twice as much as
proponents of such initiatives, the rate of success by the corporations is approximately 90 percent. As a
Book summary courtesy of the Progressive Women’s Alliance of West Michigan.
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result, citizen groups have taken the logical next step of attempting to restrict corporations from pouring
massive funds into distorting the initiative process.
p. 156 During Powell’s tenure, the two most significant Supreme Court decisions on campaign finance
reform were Buckley v. Valeo and First National Bank of Boston v. Bellotti. These decisions placed two
serious obstacles in the path of campaign finance reform. First, the Court interpreted very broadly the
connection between corporate political spending and free speech, thus setting a high constitutional bar in
front of any efforts to restrict political spending. Second, the Court interpreted very narrowly the issue of
corruption, excluding systemic corruption – as opposed to direct favor trading, or quid pro quo corruption
– as an acceptable justification for restricting corporate political contributions.
Chapter 14 – Judicial Yoga: The tangled logic of corporate rights
p. 163 The first serious effort to create a theory of the corporation that would justify giving corporations
constitutional rights was articulated by Justice Stephen Field in his ninth circuit court opinions in the San
Mateo and Santa Clara cases. Field argued that to deny corporations “equal protection” under the
Fourteenth Amendment would have the effect of denying corporate shareholders their “equal protection”
rights.
p. 166 For forty years – from 1922 to 1962 – the trend by the Court toward creating a corporate bill of
rights came to a halt, and no new rights were granted to corporations. p. 167 [B]eginning in 1962, the
Court resumed expansion of corporate rights, giving corporations: the Fifth Amendment right against
being tried twice for the same offense; the Seventh Amendment right to a jury trial in a civil case; the First
Amendment right of “commercial free speech”; the Fourth Amendment right against unwarranted
regulatory searches; the First Amendment right to spend money to influence a state referendum; the First
Amendment right of “negative free speech” [the right not to be associated with statements it disagrees
with].
Chapter 15 – Crime Wave: The roots of the scandals of 2002
p. 181 In addition to drastically polarizing the distribution of wealth in America, [stock] options produced a
number of unforeseen perverse effects, especially an increasing tendency for corporations to manipulate
their financial results.
p. 184 In the decade prior to the Enron scandal, there had been three major fights in Congress having to
do with accounting industry practices and accountability. In all three cases, big business lobbying
overwhelmed potential reforms [stock options, tort reform, conflicts of interest within auditors].
Chapter 16 – Global Rule: How international trade agreements are creating new corporate rights
p. 191 The regional agreements provide powerful new global rights for corporations – legal mechanisms
that allow a corporation based in one country to overturn the laws or judicial decisions of a different
country.
Chapter 17 – Fighting Back: A movement emerges to challenge corporate hegemony
p. 209 This experience suggests that activists should simply look for ways to contest corporate rights
wherever the opportunity presents itself, especially at the grassroots level.
Chapter 18 – Intelligent, Amoral, Evolving: The hazards of persistent dynamic entities
p. 224 Just as it was necessary to innovate and implement specific new features in order to democratize
and constrain state power, the same applies to corporate power. A short list of changes might include the
following: 1) revoking the doctrine of corporate constitutional rights; 2) curbing corporate quasi-rights as
appropriate – for example, requiring corporations to renew their charters every five years; 3) banning
corporations from political activity; 4) shoring up the boundaries of “noncorporate” spaces in society – for
example, prohibiting advertising aimed at children; 5) expanding the scope of worker and customer rights
vis-à-vis corporations; 6) strengthening countervailing institutions, especially unions; and 7) promoting
noncorporate institutions like public schools and economic forms like municipal utilities, family farms,
consumer cooperatives, and employee-run enterprises.
Book summary courtesy of the Progressive Women’s Alliance of West Michigan.