The Trouble with Corporations

That D____D Telegraph Wire

Delegate Frederick Waymire's demeanor reminded some of famed frontier hero Davy Crockett (shown above).

Delegate Frederick Waymire's demeanor reminded some of famed frontier hero Davy Crockett (shown above).

Polk County delegate Frederick Waymire, also known as "Uncle Fred" or "Old Fred," was one of the most influential of the 33 farmers at the convention. Uneducated and with a "Far West Davy Crockett" demeanor, he was known for "spotting a rascal" if one crossed his path. But even "Uncle Fred" was taken in by some corporate sharpers selling a telegraph line.

Delegate John McBride reminisced decades later about a speech that Waymire gave to the convention warning about corporations: "A year or two before...some enterprising manipulators had organized a telegraph company...to construct a line of telegraph from Portland to Corvallis.... Everyone was solicited to subscribe to the stock, and Waymire admitted that he was 'fool enough to join this lightning-using enterprise,' along with his other neighbors."

Waymire came to rue his investment in the telegraph line. (Image courtesy Smithsonian)

Waymire came to rue his investment in the telegraph line. (Image courtesy Smithsonian)

The money was paid and the line was built through the sparsely settled country of farmers and cow herders. "They had about as much use of it as if it had been built to the moon, and it soon fell into disuse, had no patronage and went into ruin." The California managers "pocketed the cash on hand and flitted from the territory." They also left considerable debt to the local stockholders who were sued personally and lost. As a result, "the sheriff went into our pockets for what the schemers had stolen."

Waymire sampled some whiskey before leaving for home. (Oregon State Archives image no. 54)

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Waymire sampled some whiskey before leaving for home. (Oregon State Archives image no. 54)

For Waymire, a long trial to contest the liability ended in defeat and "when night came on and he started home he was full of indignation combined with some of Ad Starr's wheat whisky, and his head was not entirely clear." He followed the road with the partially fallen telegraph wire lying at intervals across his path. "In the darkness his horse stepped into a coil of it, and the rider soon found himself and his horse tightly wound up in a tree by an iron wire he could not break, untie, or cut. 'That d____d telegraph wire,' he exclaimed, 'was as tightly wound around us as the judgment of the court rendered against me that day.... My best horse was ruined by the cutting of the wire about his legs, and there I stood in the dark, cussin' the rascals who got me into this mess and wishing in my soul that wire was round their necks and I had the right to draw it. No corporations of any kind, sort, or character for me!'"(9)

F. Waymire

Many delegates were suspicious of bringing corporations and industry to Oregon. Others wanted the growth that corporations offered. (Image courtesy Columbia University)

Many delegates were suspicious of bringing corporations and industry to Oregon. Others wanted the growth that corporations offered. (Image courtesy Columbia University)

Many of the delegates entered the convention with a strong mistrust of corporations. They had seen abuses in the Midwest and elsewhere in which unscrupulous corporate operators had left innocent stockholders deep in debt and workers unpaid. Other delegates saw no way for Oregon to move forward without easy access to "the genius of our age to incorporate." Some of the debate would revolve around stereotypes of corporations as large and uncaring machines of the economy that routinely chewed up farmers and workers. But couldn't corporations also be seen as a small group of local people banding together to build something that would benefit the entire community—such as the Willamette Woolen Mill that was nearing completion within view of the convention? These very different views of corporations and their role in Oregon's future would drive delegates to long and intense debates.

Should stockholders be liable for all debts to laborers?

Should stockholders be liable for all debts to laborers?

Much of the rhetorical heat centered on stockholder liability. The committee with responsibility over corporations, drafted a report that proposed limiting this liability to the amount of each stockholder's investment but it placed no limit on the liability for debts owed to laborers. Each stockholder, therefore, conceivably could be sued into insolvency for wages owed by a failed corporation. The proposal quickly drew a response and exposed divisions between anti-Democrats and Democrats as well as within the ranks of the Democrats.

The genius of corporations
Anti-Democrats viewed the lack of liability limits for labor as a threat to the meaningful development of corporations in the new state. In the temporary absence of firebrands Thomas Dryer and David Logan, they were led in debate by John McBride and William Watkins, both denouncing nearly any barrier to corporate growth. Watkins pointed to the "tangible modern benefits of liv[ing] in a country of plank roads and telegraphs, canals and railroads." He declared that "it is the genius of our age to incorporate—the genius of our institutions, and has laid the very foundation of the improvement and progress of the present time. ...Why, the United States is nothing but a great corporation." Watkins pointed to another state for an example of the possibilities: "Look at the old state of Massachusetts, and what in her position? Why, her corporate wealth is sufficient to buy up a half dozen of the smaller states of the union. To buy them up real estate and all. And she has obtained it by acting according to the tendencies of the age...."(1)

John McBride argued against restrictions on corporations. (Image no. 07-0595a courtesy National Archives)

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John McBride argued against restrictions on corporations. (Image no. 07-0595a courtesy National Archives)

McBride predicted a chilling effect on investments in Oregon if there were no limits on the liability of individual stockholders for labor expenses. He said that one or two other states had similar provisions and "the effect is [that] capital is driven beyond their limits." In looking to the progress of Oregon, McBride declared that "we want capital here. Can we get it if we lay on this restriction? If a gentleman in New York or Boston has capital to invest in any enterprise that this country stands in need of, will he send his capital here and make all the property he has left behind liable?" McBride argued that investors would logically put their money into states without liability issues...states that welcomed them instead of erecting barriers.(2)

A fungous growth of improvement
Democrats Matthew Deady and Reuben Boise were no less forceful in attacking the excesses of corporations, with Deady going so far as to say that the world would be better if they were outlawed. He claimed that the the lack of liability limits for labor would cause the demise of small farmer investors and that their labor (expended to gather capital for investments) should be valued no less than other workers. Deady derisively described the evils of the typical corporate process: "How are these companies got up? They are generally got up by some smart gentlemen running round among the farmers and representing to them some glittering schemes where hundreds of thousands of dollars may be made. They get the farmers to subscribe...and they keep managing the concern until everything connected with it is managed into their own pockets or gone to ruins. The farmers...know little or nothing about how the thing is managed until it bursts." Deady heaped shame on the proposal in which "these honest farmers are followed as long as they have a dollar, while the worthless scamps who got it up go away...."(3)

As the debate deepened, Deady upped the ante by offering a sort of "poison pill" in the form of a proposal calling for stockholders to be "individually liable for all of the debts and liabilities" of corporations. This would have the practical effect of stifling most incorporations in the state, but in his eyes would benefit Oregon by discouraging "a fungous growth of improvement in this country," with its attending California-style speculators. Deady then went further, asking delegates to compare visions of two worlds, a darkly Dickensian industrial nightmare and their own agrarian ideal:

Women in factory.

How much better off will we be then than now? Contrast your own condition with the countries that have manufactories scattered over them. They have millions of wealth, and millions of poor human beings degraded into the condition of mere servants of machinery, overtasked and overworked, and seething in misery and crime from the age of puberty to the grave. Enter in imagination if you will one of those giant factories, so common in old England or in New England. See that hive of human beings, with scarcely room to breathe, keeping time to the revolutions of the never-ceasing, unwearied machinery, and notice the sunken eye, and the collapsed chest, and the mournful sense of servitude legible on every limb. Contrast their condition with the condition of your own people, breathing the pure air, with the canopy of heaven for a ventilator, and then tell me with whom is the preference. Every one must admit that the preference is with us.(4)

But despite Deady's moving contrasts, the eloquent support of Reuben Boise, or even the colorful anecdote of Frederick Waymire's experience with the corporate misdeeds of the Portland Plank Road and Telegraph Company (see sidebar above), the delegates decisively voted down the call for effectively banning corporations. The vote showed a pragmatism that neither worshipped at the feet of unfettered corporate growth as preached by McBride and Watkins nor subscribed to the hellish vision of Oregon portrayed by Deady and Boise.

Middle ground
Instead, most of the Democrats followed the lead of George Williams and La Fayette Grover. They looked to the benefits provided by corporations that would enhance rather than threaten the rural character of the agrarian ideal. An example could be viewed only a short walk from the convention where the final work was being completed on the Willamette Woolen Mills the territory's first large factory. This corporate endeavor was home-grown in origin, scope, and benefit. This was proof that, within the proper framework and regulation, corporations could benefit Oregon and free it from the need to import expensive products from far-off factories. Otherwise, Williams warned, "We must pay tribute to Massachusetts and New England all our lives, unless we can devise some way here for the erection of manufacturing establishments in this state."(5)

The Willamette Woolen Mill (shown here in circa 1870) gave delegates hope that responsible corporate development was possible in Oregon. (Image courtesy Salem Online History)

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The Willamette Woolen Mill (shown here in circa 1870) gave delegates hope that responsible corporate development was possible in Oregon. (Image courtesy Salem Online History)

Williams envisioned a benevolent corporation that was far removed from Deady's cold and uncaring machines or scheming swindlers. He looked to more of an association of "men of moderate means" consisting of relatives, friends, and neighbors banding together to meet local needs and break the shackles of dependence on far-off corporations: "But with liberal provisions in the constitution, those little farmers throughout the country can put their capital together, as they have in the case of the woolen factory now in this city. Then a man can put in $250, one $500, and another $1,000, and the prospect is that there will be a fine and flourishing manufactory established in the territory of Oregon."(6)

After several days of debate, delegates finally voted 31 to 20 for an amendment that consisted of the more pro-corporate language that the anti-Democrats had promoted: "The Stockholders of all corporations, and joint stock companies, shall be liable for the indebtedness of said corporation to the amount of their stock subscribed, and unpaid, and no more."(7) The delegates were swayed by the argument that the legislature could enact a mechanic's lien law that would protect laborers from corporate failures. And, while they approved language that could be interpreted to support a robust capitalism and corporate enterprise, they did so while embracing the pragmatic, locally-based ideal embodied by the Willamette Woolen Mill. Oregon, they hoped, could avoid the worst excesses of the "soulless and irresponsible bodies called corporations," free itself from dependence on distant factories, and still maintain the essence of the agrarian society as it moved into statehood.(8)

Decorative divider

Notes:
1. Carey, Oregon Constitution, 242.
2. Ibid., 247.
3. Ibid., 233-234.
4. Ibid., 248-249.
5. Ibid., 255; David Schuman, "The Creation of the Oregon Constitution," Oregon Law Review 74-2 (Summer 1995): 638.
6. David Alan Johnson, Founding the Far West: California, Oregon, and Nevada, 1840-1890 (Berkeley: University of California Press, 1992) 183, 185-186; Carey, Oregon Constitution, 255.
7. Carey, Oregon Constitution, 423.
8. David Alan Johnson, Founding the Far West: California, Oregon, and Nevada, 1840-1890 (Berkeley: University of California Press, 1992) 183, 186-187.
9. Carey, Oregon Constitution, 487-488.

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An exhibit by the Oregon State Archives - Copyright © 2009