Jobs Ohio is Unconstitutional – Contact Your State Senator

Governor Kasich wants to private/corporatize the Department of Development (DOD). He has proposal to create a private corporation, Jobs Ohio, which would take over the responsibilities of job creation from the DOD. Jobs Ohio would be funded by public tax dollars.

Jobs Ohio is unconstitutional. The Ohio constitution prohibits the state from investing in corporations. It says Ohio can’t be a “joint owner, or stockholder, in any company...formed for any purpose whatever.”

The reason for this goes back to the “Plunder Law” (Ohio Loan Law) of 1837. A little background to that law is below (drawn from Citizens over Corporations: A Brief History of Democracy in Ohio and Challenges to Freedom in the Future — available for $3 from AFSC, 2101 Front St., #111, Cuyahoga Falls, OH 44221)

The Jobs Ohio bill has already passed the Ohio House. Two public hearings have been held in the Ohio Senate Finance Committee (14 people have, to date, testified in support of Jobs Ohio while only 2 in opposition). A third and final hearing is scheduled for next Tuesday. Those who repealed the Plunder Law did so to not only protect taxpayers but also democracy.

A new effort is needed today to prevent what could become Plunder Law II from being enacted.

Contact your State Senator. Ask him/her to oppose corporatizing the job-creation duties of the state through creating the unconstitutional Jobs Ohio. To find the number of your state senator, go to http://www.ohiosenate.gov/

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Early Corporate Usurpations

Since the original state constitution placed nearly total power in the
hands of the legislative branch, it was no surprise that those who sought
to gain special privileges, including corporate owners and managers,
would try to corrupt legislators and pervert legislation. Perhaps if
democracy in Ohio had been more widespread from the start, the state
legislature would not have been so easily corrupted.32

An early example of corporate usurpation was perversion of the 1837
Ohio Loan Law. The law provided funds to railroads, canals, and
turnpike companies for construction and maintenance – loans to
railroads and funds for the purchase of stock in canal and turnpike
companies.33

The law greatly benefited Ohio’s development and permitted the state
to have a different yet significant role in that development. Corporate
influence on legislators, however, resulted in a few years in tremendous
favoritism to certain companies (i.e. one railroad over another) and
industries (i.e. railroads over canals). This combination resulted in a
$20 million state debt, increased taxes and popular belief that
government had been plundered (thus the nickname the’“Plunder
Law”) by corporate interests.34

Corporate influence of the legislature was evident in the number of
pieces of legislation benefiting one or more corporations (called
“special” legislation). In 1833 the legislature enacted only 30 pieces
of general legislation but 250 pieces of special legislation. In 1849,
the legislature enacted 75 plank road, 67 railroad, and 78 turnpike
bills. In 1851, as the Constitutional Convention finished its work,
817 pieces of special legislation were enacted, including 40 to benefit
insurance companies, 66 for plank roads, 74 for turnpikes, and 89 for
railroads.35

In 1842, two events transpired which altered the corporate form in
Ohio. First, the Plunder Law was repealed. Some have noted that
corporations didn’t want state control through stock ownership and
that propagandizing the Loan act as plunder represented the start of a
laissez faire movement in the relationship between the state
and business corporations.36

Second, a general law was passed which created a set of general rules
governing corporate activity. These rules removed the requirement
that corporate charters had to be granted through the passage of a
specific statute. More importantly the rules stated that direct managers
and stockholders were not immune from personal liability for the
corporation’s wrongdoing so long as the aggrieved party sued the
corporation first. If the suit was successful, the corporate directors,
managers, and stockholder could be held personally responsible.37

The 1842 act changed corporate law in two major ways. First, it
set forth specific laws to govern corporations where none had
existed. Second, the act made corporate officials subordinate to
the people. No longer could evil deeds be shrouded in the guise of
corporate action. So long as the injured parties followed the proper
procedure, wrongdoers could be found personally liable.
Significant public pressure must have forced passage of such a
law.

Unfortunately, this provision of the 1842 act was short-lived.
Enraged by the loss of their liability shield, corporate officials
and their agents forced through a measure which repealed the
provision in 1845.38

1851 Constitution

The Constitution of 1802 proved to be an ineffective instrument
because “the legislature swallowed up all the rest of the government”
and “corporate power and the money power...joined hands.”39 Nearly
forty years of corruption and laws such as the Plunder Act proved
too much for Ohioans. Public alarm over massive state debt,
particularly indebtedness for canal construction and unsound
investments in railroad stock and other private ventures, led to public
action. A ballot proposal to hold a constitutional convention was
approved statewide by 73%. As the Cleveland Plain Dealer put it,
the convention provided an opportunity to pluck “the root of all
political sin” from Ohio’s soil.40 In the words of one commentator,
“the major motivating force [for the convention] was an anti-
corporation sentiment.”41

H.D. Clark, delegate to the Convention stated the problem in these
terms:
The experiment has been tried in that body and almost every
effort to engraft private responsibility on corporations has
failed. The State is now strewed with the rotten, putrid
carcasses of defunct corporations, and the effluvia is a stench
in the nostrils of an outraged, swindled, community. The
people of the county I represent have been scourged too much
by corporations, to be willing to trust the Legislature.42

Although the convention addressed issues such as race and judicial
reform, concern over legislatively-sponsored corporate greed
dominated the debate.

The 1851 Constitution addressed the problem of “special laws”
benefiting corporations by agreeing that “the General Assembly shall
pass no special act conferring corporate powers. Corporations may
be formed under general laws; but all such laws may, from time to
time be altered or repealed.” At that time this was seen as an attempt
to increase citizen power. No longer could the state legislature pass
specific acts incorporating specific corporations with specific
provisions. In the following year, only 24 pieces of special legislation
were passed. The same overall rules would now apply to all classes
of corporations.

The portions of the 1851 Constitution with the greatest impact upon
corporations are contained in Article VIII and Article XIII. Section 4
of Article VIII deals primarily with prohibiting the state from
colluding with corporations, while Section 6 places similar limits
on local governments. Essentially, these sections prohibit the gift
or loan of state credit “to, or in aid of, any individual, association
or corporation whatever” and forbids the state to ever “become a
joint owner, or stockholder, in any company or association in this
state or elsewhere, formed for any purpose whatever.”43

Article XIII consists of seven sections placing general limits on
the exercise of corporate power. Most significant are Sections 2
and 3 which reinforce the notion that corporate powers and identity
exist only to the extent provided for by law; Section 4 states that
“[t]he property of corporations...shall forever be subject to taxation,
the same as the property of individuals,” and Section 7 precludes
the state from “authorizing associations with banking powers”
unless such a measure is passed by the people in a general election.44

The new Constitution that emerged from the convention was
adopted in 1852. With the addition of several amendments, the
same document still guides Ohio’s government today.