I

The story of the 1978 referendum begins with a man named Ephron Catlin. In 1971, Catlin was an executive vice president of the First National Bank of Boston, the oldest and largest bank in New England, with $5 billion in assets and 5,000 employees.Footnote ³² More importantly, he was also a member of “the Vault,” a group of fourteen executives around Boston who, since 1959, met twice a month by an old bank vault to give the mayor in-person policy advice.Footnote ³³ He was the group's “propagandist to the business community,” as ready as the others “to take over the city and run it.”Footnote ³⁴ Like other Vault members, Catlin was a socially liberal Midwesterner who had gotten into Harvard, married a Boston Brahmin (specifically, a Saltonstall), and liked the area enough to stay after graduating.Footnote ³⁵ Unlike the others, Catlin was outspoken, a little tasteless, and militant about organizing businesspeople to fix the city's financial problems. “When ya’ turn on the faucets aroun’ here, ya’ can get things done,” Catlin explained, and Boston needed “a thorough municipal hysterectomy.”Footnote ³⁶

Boston Magazine recently named Catlin one of the “ten most powerful men” in Massachusetts because of his work on behalf of the Vault over the previous decade.Footnote ³⁷ He had led the charge to build a “slick, shiny” New Boston out of the ashes of what he had seen as a decaying city.Footnote ³⁸ Catlin had a hand in the creation of virtually every public–private partnership in Greater Boston, from the Prudential Center to the Massachusetts Bay Transit Authority and the home stadium of the New England Patriots.Footnote ³⁹ The Boston Globe editorialized that “a bridge [had been] built between the financial community and Boston's political administration,” across which came “the money to build the New Boston.”Footnote ⁴⁰

Catlin was pessimistic, however, about the 1970s. Boston elected a new mayor in 1967, Kevin White, who was not as interested as his predecessors in receiving policy advice from some bankers.Footnote ⁴¹ In the State House, Governor Francis Sargent began promoting unemployment benefits, environmental reforms, and other social service programs.Footnote ⁴² Even President Richard Nixon was signing into law departments such as the Environmental Protection Agency.Footnote ⁴³ The net result was an increase in taxes to build new bureaus instead of new buildings; from Catlin's perspective, a disaster.

What angered Catlin the most, however, was the “sea of apathy” that he witnessed among other business leaders who shared his concerns.Footnote ⁴⁴ A 1973 Globe poll and a 1974 national survey revealed that more than 95% of corporate executives believed that government was no longer “attuned to business and industry problems.”Footnote ⁴⁵ They believed that government was, instead, dominated by special interest groups of environmentalists, welfare rights organizations, and consumer activists such as Ralph Nader.Footnote ⁴⁶ But rather than fighting this “sock-it-to-business climate,” the executives were adopting what Catlin called a “defeatist attitude.”Footnote ⁴⁷ “We don't have a business community. Just a fragmented bunch of self-interested people,” one complained.Footnote ⁴⁸ “The businessman has a lower credibility in Washington than that of any other group,” said another.Footnote ⁴⁹ “If one doubts this,” a third observer wrote in 1971, “let him undertake the role of ‘lobbyist’ for the business point of view… [I]n terms of political influence … the American business executive is truly the ‘forgotten man.’”Footnote ⁵⁰

That 1971 observer was a man named Lewis Powell, an accomplished lawyer from Virginia whose response to the problem foreshadowed Catlin's own. Powell was a partner in a prestigious law firm, a former president of the American Bar Association, and a director on the boards of eleven corporations.Footnote ⁵¹ He was also among a handful of intellectuals who were actively lobbying business executives to take more aggressive stands against regulation.Footnote ⁵² Powell regularly gave speeches asking businesspeople to defend the “free enterprise system” from a “corrosive attack” by Nader, “New Leftists,” the Black Panthers, academics, journalists, and other so-called opponents of capitalism.Footnote ⁵³ Eventually, Powell summarized these speeches in a memorandum to his friend in the United States Chamber of Commerce called “The Attack on the Free Enterprise System.”Footnote ⁵⁴

Powell's memo, which by 1972 had become infamous,Footnote ⁵⁵ lamented the fact that members of the New Left had access to influential institutions—universities and media conglomerates—with which to promote new regulations. He called on business executives to enlist their own institutions—business corporations—to respond using “guerrilla warfare” against the regulatory state. “The day is long past when the chief executive officer of a major corporation discharges his responsibility by maintaining a satisfactory growth of profits, with due regard to the corporation's public and social responsibilities,” Powell wrote.Footnote ⁵⁶ “If our system is to survive, top management must be equally concerned with protecting and preserving the system itself” without “the reluctance which has been so characteristic of American business.”Footnote ⁵⁷

Powell's memorandum was significant, not just because of its militant tone, but also because of his expansion of the corporate-law theory known as “corporate citizenship.” Fifty years earlier, corporate-law scholars had been incredibly nervous about the power of large corporations. Theoretically, corporations were groups of shareholders who invested their money together and elected slates of directors to manage their investments and supervise the day-to-day work of executives.Footnote ⁵⁸ But some directors, such as Henry Ford, operated with virtual autonomy from the scores of ordinary people who owned stock in their corporations. The Michigan Supreme Court recognized in 1919 that at Ford Motor Company, “No plan of operations could be adopted unless he consented, and no board of directors can be elected whom he does not favor.”Footnote ⁵⁹ To ensure that directors kept shareholders’ interests above their own, judges regularly second-guessed corporate expenditures made for charitable or other causes that were not directly tied to shareholders’ interests.Footnote ⁶⁰ But as the Great Depression hit, directors and executives began arguing that they had a “social responsibility” to more than just shareholders; if capitalism were to survive, they also had to be able to donate money to care for workers, customers, and neighbors.Footnote ⁶¹ Eventually, this idea of “corporate citizenship” took hold, and by the 1970s, judges allowed directors to spend corporate dollars on schools and charities; to improve the standard of living of employees; and, in Powell's words, “generally to be good citizens.”Footnote ⁶²

But what Powell was calling for was more than this “traditional role of a business executive.”Footnote ⁶³ He wanted executives to go further, marshaling the “resources of American business” toward “paid advertisements” and “direct political action.”Footnote ⁶⁴ “A significant first step by individual corporations could well be the designation of an executive vice president,” Powell wrote, “whose responsibility is to counter—on the broadest front—the attack on the enterprise system.”Footnote ⁶⁵

As the executive vice president of the First, Catlin could not have been in a better position to respond to Powell's plea. Catlin began in 1971 by transforming the New England Letter, a staid pamphlet that the bank had long circulated to approximately 5,000 business executives, government officials, and academics.Footnote ⁶⁶ Catlin convinced the chairman and president of the First to replace the Letter’s editor with a man named James Howell, an economist who shared Catlin's contempt for “stubborn politicians and apathetic business people.”Footnote ⁶⁷ Between 1971 and 1972, Catlin and Howell published livid critiques in the Letter, and gave speeches across New England calling upon corporate executives to steer their corporations to oppose what the bank called a “strong anti-business environment.”Footnote ⁶⁸ The bank's annual reports editorialized that liberal politicians needed “to face up to economic reality and fiscal responsibility,” arguing that “well-intentioned” social programs were “crippl[ing] the very economic forces—productivity and employment—which generate the tax money without which these programs would soon collapse.”Footnote ⁶⁹ The bank soon made a name for itself across the country. The editorial boards of the Wall Street Journal and the American Banker began hailing the First for sounding “a remarkable alarm” and breaking “sharply with the usual banking practice.”Footnote ⁷⁰

In 1972, Catlin had the opportunity to practice what he was preaching, leading the First into the middle of a controversial statewide referendum. At issue was a constitutional amendment that would permit Massachusetts to tax high incomes at a higher rate than low incomes, a proposal known as a “graduated income tax,” or “grad tax.”Footnote ⁷¹ Even though the federal government had used a grad tax since 1913,Footnote ⁷² Massachusetts was one of a dozen states whose constitution still prohibited it.Footnote ⁷³ This was the third time in a decade that Massachusetts was voting on the issue: in 1962 and 1968 opponents badly outspent and outvoted supporters.Footnote ⁷⁴ What made supporters in 1972 optimistic was a new law that prohibited corporations from spending any money against them.Footnote ⁷⁵

The authors of the 1972 law, including Governor Sargent, were annoyed that in 1962 and 1968, corporations had spent hundreds of thousands of dollars opposing the “grad tax” even though it did not affect their bottom lines.Footnote ⁷⁶ The “grad tax” would raise the personal income taxes for the top 10% of earners and lower taxes for everyone else; meaning that the only people who stood to benefit from its defeat were the corporations’ highly paid top executives.Footnote ⁷⁷ One legislator complained that these executives “ought to be giving out of their own wallet, not out of corporate treasuries.”Footnote ⁷⁸ A writer for the Globe agreed that the law would “stop the flow of corporate funds into a kitty that is obviously for the personal benefit of executives, not the corporation.”Footnote ⁷⁹

Indeed, even some shareholders of major corporations agreed that legislation was necessary to stop corporate executives from spending shareholder dollars on ideological or personal causes. To see why, consider the example of Ferdinand Lustwerk, who, in 1962, complained when the directors of Lytron, Inc., decided to spend $500 against the first “grad tax”.Footnote ⁸⁰ Even though the directors were subject to annual elections by shareholders such as Lustwerk (who owned 15% of Lytron), there was virtually nothing he could do to stop the expenditure. In most corporations at the time, the directors chose for themselves who would be nominated at the next election.Footnote ⁸¹ Moreover, the directors could use the company's money to post written communications to shareholders, solicit their votes, and otherwise finance their re-elections in campaigns that Ralph Nader derisively called a “‘Communist ballot’—that is, a ballot which lists only one slate of candidates.”Footnote ⁸² This meant that Lustwerk could only vote Lytron's directors out of office if he nominated his own candidates, paid for their election materials, and convinced the geographically dispersed owners of 35% of Lytron's shares to vote his way; all to stop a $500 donation.Footnote ⁸³ Unsurprisingly, Lustwerk thought it might be easier—and cheaper—to sue the directors. But the Supreme Judicial Court of Massachusetts shot down his case, holding that unless the Massachusetts legislature intervened, corporate directors were authorized to spend company money on the “grad tax.”Footnote ⁸⁴

Nevertheless, when the Massachusetts legislature did ban corporations from making similar donations in 1972, “[t]he possibility of a more severe personal income tax hit a visceral nerve” with the executives and directors of the commonwealth's corporations.Footnote ⁸⁵ Catlin, for his part, called the ban “typical of the undue harassment to business that takes place on Beacon Hill.” On behalf of the First, he retained a law firm to sue the commonwealth for violating the bank's constitutional rights.Footnote ⁸⁶

Catlin filed the First's lawsuit directly in the Supreme Judicial Court. The First's lawyer, Francis Fox, wrote of the bank as if it were literally a corporate citizen. He wrote that the First and other corporations were “artificial persons” who “reasonably believe[d]” that a “grad tax” would “discourage [human] persons of high ranking executive ability from settling or remaining in Massachusetts.”Footnote ⁸⁷ As a bank with billions of dollars in loans and deposits, the First had a responsibility to “communicate” these beliefs to voters, but in order to do so, the bank needed “the intervention of some medium of expression,” such as a newspaper advertisement.Footnote ⁸⁸ Prohibiting the bank from spending money on political advertisements, therefore, violated its ability to speak.

Analogizing a bank to a person was a sound legal strategy at the time. The Fourteenth Amendment to the United States Constitution declares that no state may deprive any “person” of “life, liberty, or property without due process of law.”Footnote ⁸⁹ In a series of decisions at the turn of the twentieth century, the Supreme Court of the United States, perhaps inadvertently, interpreted the term “person” to include a corporation.Footnote ⁹⁰ Decades later, in another context, the Court interpreted the term “liberty” to include the First Amendment's protection of “freedom of speech, and of the press.”Footnote ⁹¹ Putting this all together, the bank's lawyer argued that the First was therefore “a ‘person’ within the meaning of the Fourteenth Amendment, and as such has First Amendment rights of communication.”Footnote ⁹² Indeed, members of the Court's liberal wing, such as Justice William Brennan, had recently signed on to landmark First Amendment decisions protecting advocacy corporations such as the National Association for the Advancement of Colored People (NAACP) and media corporations such as the New York Times Company.Footnote ⁹³

Writing of the bank as if it were a person also obscured the thousands of people who composed “the First.” Only the top 10% of Massachusetts earners—4% of the First's employees—would see their taxes go up if the “grad tax” passed.Footnote ⁹⁴ The rest would see their taxes go down. Thinking of the bank as a single individual, however, made it sound as if Catlin's perspective were the only one that mattered. The Massachusetts attorney general later emphasized this point, arguing that the First's “decision to spend corporate money to oppose a graduated income tax was made by the corporate management and did not involve any stockholder input by the corporation's members who disagreed with its management's positions on public issues.”Footnote ⁹⁵ As with Ferdinand Lustwerk in 1962, many shareholders and employees would surely have objected, had Catlin solicited their opinion.

The First ended up winning its lawsuit on a minor technicality.Footnote ⁹⁶ Catlin and his allies celebrated, calling their win a defeat of corporate “disenfranchisement” and a vindication “of the rights of corporations as citizens to participate in the political life.”Footnote ⁹⁷ The supporters of the “grad tax,” meanwhile, recognized immediately that the decision would lead corporations to overwhelm their “poor people's” movement.Footnote ⁹⁸ Before the Court's decision in October, Catlin's campaign spent only $7,000 dollars on advertisements.Footnote ⁹⁹ After the decision, with donations from the First and other businesses, it spent more than ten times as much as the referendum's supporters, winning in November by a 2–1 margin.Footnote ¹⁰⁰

Over the next few years, Catlin continued to lead the First into new areas of political advocacy. In 1973 and 1974, the First published studies demonstrating that “our most liberal elected officials” were incapable of the sort of professional fiscal management required by modern governments.Footnote ¹⁰¹ In a 1975 report to shareholders, the First's leadership explained that the First's “increasingly demanding role as a good corporate citizen” required it “to resist governmental encroachment” and “combat strongly the idea that more government is necessarily better government.”Footnote ¹⁰² Under Catlin's direction, the First helped to promote a new kind of politician for Massachusetts—one like Democratic candidate Michael Dukakis.Footnote ¹⁰³ Like Catlin, Dukakis and other New Democrats were social liberals with political bases in Boston's increasingly white and professional suburbs; politicians who ran on platforms of running government professionally, efficiently, and without catering to traditional constituencies who depended on unions or government aid.Footnote ¹⁰⁴

Not everyone was excited about a group of bankers participating in politics, or about the new direction of the Democratic Party. Nancy McDonald, the chairwoman of a local nonprofit corporation, United Peoples, Inc., was particularly alarmed. Like Catlin, McDonald considered her corporation to be a “people's advocate.”Footnote ¹⁰⁵ Unlike Catlin, United Peoples incorporated in 1971 with the express goal of giving families on welfare a “political voice.”Footnote ¹⁰⁶ McDonald was herself a welfare recipient--as were her corporation's 1,800 members.Footnote ¹⁰⁷ “The poor have absolutely no political clout,” she explained. “Anything that gets done politically around here for the poor is done by making a lot of noise.”Footnote ¹⁰⁸ In the face of the First's political activism, the board of United Peoples successfully lobbied the state legislature to hold a new referendum on the “grad tax” and modify its ban on corporate political spending to ensure that the First could not spend money in opposition.Footnote ¹⁰⁹

“Believing that corporations have the same First Amendment rights as individuals,” the First once again “led the fight” “to assert the First Amendment rights of corporations to speak out on political issues which affect business.”Footnote ¹¹⁰ United Peoples intervened on the side of the commonwealth, claiming that the First had no right to participate in a referendum that benefitted only its executives.Footnote ¹¹¹ What the banks “offered as the dispassionate economic opinions of certain business interests may more accurately represent the personal but highly interested views of the high-paid executives and directors who control those corporations and who would probably have to pay higher personal taxes if a [“grad tax”] were enacted,” its lawyer wrote.Footnote ¹¹² The Supreme Judicial Court agreed: “It seems clear to us that a corporation does not have the same First Amendment rights to free speech as a natural person.”Footnote ¹¹³

The First's leadership appealed to the Supreme Court of the United States, which agreed to hear the First's case in 1977.Footnote ¹¹⁴ And when the First's lawyers argued before the Court, one of the justices was particularly attentive to their arguments: Lewis Powell. Two months after writing his 1971 memorandum, Powell was asked by President Richard Nixon to join the Supreme Court. As a justice, Powell was no ideologue; he developed a reputation as a swing vote comfortable in the majorities of both Roe v. Wade Footnote ¹¹⁵ and Gregg v. Georgia.Footnote ¹¹⁶ But Powell did provide a consistent vote for the increased rights of corporations.Footnote ¹¹⁷

At the time, the Supreme Court's interpretation of the First Amendment was in flux. The decade earlier, under Chief Justice Earl Warren, liberal members of the Court had interpreted the First Amendment's protection of free speech capaciously. They struck down various restrictions on politically marginalized groups, from communists to civil rights demonstrators to antiwar protestors.Footnote ¹¹⁸ In NAACP v. Alabama,Footnote ¹¹⁹ for example, the Court prohibited a state from banning a civil rights corporation from operating there; and in New York Times Co. v. Sullivan,Footnote ¹²⁰ the Court overturned a libel case against a media corporation for its publication of a controversial civil rights advertisement.

At the same time, the Court continued to tolerate bans on speech in a variety of contexts, from prohibitions on “obscene” pornography to laws prohibiting the burning of draft cards to restrictions on commercial advertisements.Footnote ¹²¹ Legal scholars and the justices offered a catalog of explanations for the Court's inconsistent First Amendment jurisprudence: it protected “freedom of expression” only when it assured “individual self-fulfillment”Footnote ¹²²; it protected the free exchange of truthful information only when it contributed to consensual “self-government”Footnote ¹²³; it protected the pursuit of truth only by opening pathways for thoughts to get themselves “accepted in the competition of the market.”Footnote ¹²⁴ No matter which explanation the justices selected, however, none was ever entirely predictive; each required the justices to subjectively weigh their chosen “individual and societal interests” in protecting particular speech against the interests on the other side in restricting it.Footnote ¹²⁵

As Justice Powell and other Nixon appointees joined the Court, the justices began weighting the individual and societal interests of business-friendly speakers more heavily than the Warren Court had. In the language of constitutional doctrine, they began viewing more types of expenditures as protected “speech” that states could abridge only if the bans were narrowly tailored to serve a compelling government interest. In a series of cases culminating in 1976's Virginia State Pharmacy Board v. Virginia Citizens Consumer Council, Inc., for example, Justice Powell joined liberal Justices William Brennan and Thurgood Marshall in striking down restrictions on commercial advertisements.Footnote ¹²⁶ Where the liberal justices and the American Civil Liberties Union believed that the advertisements protected the associational interests of poor people and women seeking abortions—whom the advertisements at issue targeted—Justice Powell believed that the companies who produced these advertisements should be as protected as the NAACP or New York Times.Footnote ¹²⁷ That same year, in a lawsuit brought by Powell's ideological ally Senator James Buckley, the Court struck down various post-Watergate campaign-finance restrictions, narrowing the government's latitude to regulate any “expenditure of money” when it financed political ideas.Footnote ¹²⁸ That decision, Buckley v. Valeo, also authorized corporations to create an unlimited number of “responsible citizenship program[s] for political activities,” also known as political action committees (PACs).Footnote ¹²⁹ Although Buckley nominally freed both corporations and unions to set up and solicit contributions for these PACs, in Abood v. Detroit Board of Public Education, the Court prohibited public-sector unions from requiring the employees they represented to contribute to their PACs.Footnote ¹³⁰ It remained an open question whether the managers of private corporations had free latitude to require their companies’ employees or shareholders to contribute to their political activity.

These decisions were undoubtedly on the justices’ minds when the First's lawyers filed their briefs arguing that business corporations were “persons” who had First Amendment “rights of freedom of expression.”Footnote ¹³¹ The lawyers described the largest bank in New England as a “corporate speaker,” one who had the same interest in contributing to the marketplace of ideas as the New York Times, the NAACP, or any other civic-minded individual.Footnote ¹³² “The ebb and flow of the economic and financial tides in Massachusetts form its life blood,” they wrote.Footnote ¹³³ And in light of the commercial-advertising cases, the lawyers argued that an interested public had a societal interest in hearing whatever the corporations had to say.Footnote ¹³⁴

Writing in opposition, the attorney general of MassachusettsFootnote ¹³⁵ fought the corporate personhood metaphor by distinguishing between the First and the real-life people who were actually leading its fight against the “grad tax.” Under his preferred metaphor, the First was not a “citizen” or “person,” but a “legal fiction” created by the commonwealth that possessed “only those properties which the charter of its creation confers upon it.”Footnote ¹³⁶ Legal fictions do not possess the “peculiarly personal rights” of their “human owners and managers,” he wrote.Footnote ¹³⁷ “Corporations cannot have opinions. In fact, because of the dispersion of stock ownership and shareholder apathy, opinions purportedly expressed on behalf of a corporation tend to be the personal opinions of its management.”Footnote ¹³⁸ Indeed, in the case of the First, the corporate management did not solicit “any stockholder input.”Footnote ¹³⁹ Just as the Supreme Court in Abood had held that the First Amendment protected public-sector employees from having to subsidize union leaders’ political activities, the attorney general argued that the ban was narrowly tailored to serve the compelling interest of protecting shareholders from having to subsidize corporate leaders’ political activities.

Ultimately, a majority of the Court agreed with the First. Justice Powell received the assignment to explain why the Massachusetts ban was unconstitutional. Initially, he felt that the Court's recent cases had gone “a long way toward recognizing First Amendment rights of corporate entities.”Footnote ¹⁴⁰ But at his clerk's suggestion, he avoided holding that corporations “have” First Amendment rights,Footnote ¹⁴¹ instead writing in his opinion that political “speech” should be protected regardless of where it originates. Political speech is “indispensable to decisionmaking in a democracy,” he wrote. “[T]his is no less true because the speech comes from a corporation rather than an individual. The inherent worth of the speech in terms of its capacity for informing the public does not depend upon the identity of its source, whether corporation, association, union, or individual.”Footnote ¹⁴²

Doctrinally, it was not enough for Justice Powell to hold that the First Amendment protected the First's political speech; he also had to explain why the ban was not narrowly tailored to serve a compelling societal interest. To do this, Justice Powell had to acknowledge the attorney general's argument that Massachusetts was interested in protecting the First's shareholders. Privately, the justice thought that such an interest was “close to frivolous,”Footnote ¹⁴³ given that the ban “would prohibit a corporation from supporting or opposing a referendum proposal even if its shareholders unanimously authorized the contribution or expenditure.”Footnote ¹⁴⁴ Publicly, the justice agreed with the First's lawyers that if dissenting shareholders really were upset by the First's political activity, they could always vote the directors out of office “through the procedures of corporate democracy.”Footnote ¹⁴⁵ “Acting through their power to elect the board of directors or to insist upon protective provisions in the corporation's charter, shareholders normally are presumed competent to protect their own interests,” Justice Powell wrote. If the First started spending money “merely to further the personal interests of management,” shareholders should resort to the corporate ballot box, not the state legislature.Footnote ¹⁴⁶

Just as Powell's 1971 memorandum was significant for its expansion of “corporate citizenship,” his 1978 opinion is noteworthy for its conclusion that “corporate democracy” would check corporate citizenship's abuses. This conclusion was so optimistic that it sounded almost naïve. As discussed earlier, the idea behind corporate democracy is that in any business corporation, shareholders are responsible for electing the company's board of directors, who in turn appoint executives such as Ephron Catlin.Footnote ¹⁴⁷ Theoretically, when an executive does something selfish, the shareholders can elect a new board. But as Ferdinand Lustwerk learned in 1962, this ideal had long been considered a “myth” in a world in which directors could nominate themselves and use shareholder dollars to finance their reelection campaigns.Footnote ¹⁴⁸ In the early twentieth century, corporate theorists from Louis Brandeis to Adolph Berle and Gardiner Means found that “the usual stockholder has little power over the affairs of the enterprise and his vote, if he has one, is rarely capable of being used as an instrument of democratic control.”Footnote ¹⁴⁹ In 1960, an editor of the Yale Law Journal observed that “present day commentators … tend to regard the notion of corporate democracy as obsolete.”Footnote ¹⁵⁰ And in 1977, when Chief Justice Warren Burger considered the First's case, he noted in a memo that “[c]orporations rarely, if ever, consult stockholders on expenditures and indeed a great many expenditures are made without consulting with the directors, even though management is accountable to both.”Footnote ¹⁵¹

In this respect, the First was typical. Ephron Catlin never solicited shareholders’ opinions about the bank's political activism. And the annual meetings of shareholders were a joke. In the bank's 1977 meeting, for example, only three people said anything critical about the First. One of them told the chairman, “Look, I'm the employer here and you're the employee. Maybe we ought to ask for your resignation.”Footnote ¹⁵² The guards were “told that when the word came we were to remove them very diplomatically.”Footnote ¹⁵³

But if corporate democracy was a myth, it was a useful myth. Just as calling a corporation a “person” made it seem like a monolithic entity, calling it a “democracy” “create[d] an impression in the public mind … that a degree of shareholder supervision exists which in fact does not.”Footnote ¹⁵⁴ In a memorandum to Justice William Rehnquist, Justice Powell made it clear that managerial autonomy was precisely what he wanted to protect. “Although no prior decision has expressly recognized corporate speech generally as explicitly as my opinion does, I view the trend of our decisions over the past century as supporting the proposition that artificial entities are treated as ‘persons’ for purposes of exercising and relying upon constitutional rights,” he wrote.Footnote ¹⁵⁵ By protecting “corporate expression,” he indicated that he was protecting the “management [who] believes the corporation must speak out to protect the long term viability of its business,” the “free enterprise system,” and “our educational, cultural, and—yes—even political affairs.”Footnote ¹⁵⁶ Justice Powell concluded by calling himself a “Jeffersonian from Virginia,” one who views “with increasing concern the ever burgeoning power of government over the lives of people.”Footnote ¹⁵⁷ The man who had called for executives to wield their corporations in guerrilla warfare against the New Left was continuing to assist the contras he had armed.

II

There was one nearby corporation for which “corporate democracy” was alive and well: The city of Boston. The municipal corporation's response to First National Bank v. Bellotti drove home for ordinary people what Justice Powell's ruling entailed.

Few people regard Boston as a “corporation” today, but when it was incorporated as a city in 1822, corporations were precisely what residents had in mind. At the time, the term corporation was used to describe any bank, trading company, or other organization that had its rights and governing structure specified in a written charter granted by the sovereign.Footnote ¹⁵⁸ Americans had a long history with these sorts of institutions—seven of the thirteen colonies were originally governed by trading corporations such as the Massachusetts Bay Company—and by the 1820s, corporate charters were seen as “constitutions” for organizations.Footnote ¹⁵⁹ Like the United States Constitution, charters gave corporations enumerated powers, such as the ability to tax members, which corporations could exercise as long as they abided by particular restrictions. When the Massachusetts legislature chartered the city of Boston in 1822 and the official bank of Massachusetts in 1784, both corporations were essentially privately run government agencies, which the legislature treated as it would a public university or department of revenue.Footnote ¹⁶⁰

In an 1819 decision called Dartmouth College v. Woodward, however, the Supreme Court began a century-long campaign to distinguish between government-like “public” corporations, such as the city of Boston, and person-like “private” corporations, such as the Massachusetts Bank.Footnote ¹⁶¹ This lasted through 1907's Hunter v. City of Pittsburgh.Footnote ¹⁶² By then, the Supreme Court declared that “municipal corporations” were still “agencies” of government whose exercise of power had to be clearly granted by state legislatures and closely guarded by state courts.Footnote ¹⁶³ But it gave private corporations such as the Massachusetts Bank—now known as the First National Bank of Boston—the same discretion and constitutional protection from state regulations that individuals received.

Many Bostonians still considered their city a corporation, however, and politicians often analogized the city to a private corporation when discussing the city's corporate charter.Footnote ¹⁶⁴ For example, in the early 1900s, Republicans in the legislature voted to eliminate partisan elections in the city. They argued that political parties made as little sense in a municipal corporation as they did in, say, a meatpacking corporation.Footnote ¹⁶⁵ Democrats in the city—who were winning these partisan elections—objected, calling the city “a political and not a business corporation.” Unlike the sham of corporate democracy, they argued, municipal elections comprised “a great number of people, each with a single vote,” for whom parties were absolutely necessary.Footnote ¹⁶⁶

By the 1960s, these charter fights resulted in a municipal corporation whose nonpartisan “strong mayor” wielded enormous power relative to other city officials, but who was subject to strict financial oversight by a state-appointed finance commission.Footnote ¹⁶⁷ As one critic observed, “Under the present system the Legislature is the real Board of Directors of the Corporation known as the City of Boston. The Mayor is the President of the corporation, the citizens are the stockholders who had the privilege of choosing the President and paying the bill but, the operating policies are dictated by the Board of Directors who have no direct responsibility as a group to the stockholders.”Footnote ¹⁶⁸

In 1967, when Kevin White ran for mayor of Boston, he inherited this disconnect between the “stockholders” of the corporation, its “president,” and its “directors.” The scion of a prominent Irish Democratic family, White was elected as someone “who knows that what Boston needs is good business management that can attract bright people.”Footnote ¹⁶⁹

As mayor, White effortlessly navigated a decades-long trend in Massachusetts in which suburbanization and a declining manufacturing base transformed the Democratic Party from a machine-like organization dominated by urban, blue-collar unions into a technocratic organization dominated by suburban, white-collar professionals.Footnote ¹⁷⁰ A graduate of Williams College, White attempted to surround himself with “a new managerial class all throughout government.”Footnote ¹⁷¹ He appointed college graduates and Harvard MBAs; he brought “generally accepted accounting procedures” and “modern management techniques to the city”; he even added computers.Footnote ¹⁷² In other words, like Ephron Catlin, White wanted to run government “like a private business.”Footnote ¹⁷³ As one reporter quipped, “People have little faith in governments run like governments.”Footnote ¹⁷⁴

There were, of course, problems with running a municipal corporation like a business corporation. For one thing, the state legislature allowed Boston to collect only one form of revenue: a tax on real estate.Footnote ¹⁷⁵ This prevented the mayor from charging people who used his city's roads, shopped in its businesses, or called its police.Footnote ¹⁷⁶ It also became a problem as white professionals fled the city in response to a 1974 court decision ordering Boston to desegregate its public schools.Footnote ¹⁷⁷ Mayor White survived Boston's busing crisis by positioning himself as a professional administrator who cared only about the safety of Boston's children, but by 1976, he was taxing the homeowners who remained in the city at one of the highest rates in the country.Footnote ¹⁷⁸ “Obviously a government isn't going to go out of business, the way, say, the Buggy Whip Manufacturing Co. might,” one observer said.Footnote ¹⁷⁹ But Boston “could bankrupt” if it could not find a way to keep its spending in line with revenue.Footnote ¹⁸⁰

The other thing keeping Mayor White from running the city like a business was the persistent expectation of residents that they would participate in the decisions he made on their behalf. In 1976, for example, Mayor White announced a well-liked plan to amend the city's charter and impose new oversight over what he called “the richest and fattest and least accountable school system in the country.”Footnote ¹⁸¹ He also slipped in an unrelated provision to bring back partisan elections, virtually guaranteeing his re-election in a city in which Democrats outnumbered Republicans 10–1.Footnote ¹⁸² Rather than put the package to a referendum, the mayor pushed it through the city council over Christmas, at 2 a.m., with abbreviated hearings.Footnote ¹⁸³ When residents discovered what had happened, they found it “outrageous” that they were “inexplicably excluded from the process.”Footnote ¹⁸⁴ The state legislature rejected the plan after weeks of hearings in which residents called the process an “affront to democracy,” “secretive, exclusive, and elitist,” “a joke,” “autocratic,” and “a contemptuous and cynical disregard for the people of the City.”Footnote ¹⁸⁵

Despite these difficulties, Mayor White survived the early 1970s on good terms with Ephron Catlin and his band of technocratic, antiwelfare, fiscally restrained New Democrats such as Governor Michael Dukakis. But the peace between the mayor and the bankers fell apart after New York City nearly defaulted in 1975. In January 1976, national credit agencies worried about the “next New York” made a surprise drop in Boston's credit rating.Footnote ¹⁸⁶ That drop hurt Boston's ability to sell bonds on the national market, a practice it relied on to cover its operating expenses through the months preceding its spring tax collections.Footnote ¹⁸⁷ In November 1976, Mayor White and James Young, the city's chief financial officer, found themselves begging the First and other regional banks for help with purchasing and underwriting the city's bonds.Footnote ¹⁸⁸ The First agreed to help, publicly out of a “sense of social responsibility,” privately because it allowed the bank to impose various conditions on the city, such as a requirement that the city reduce its spending and undergo independent audits by the bank's accounting firm, Coopers & Lybrand.Footnote ¹⁸⁹ “There were people around the time who felt letting the city go bankrupt was a good idea,” Young later recalled. “Some people said dealing with the banks was a loss of democracy. We said, ‘Hey, bankers lend out money and expect to get it back.’”Footnote ¹⁹⁰ But the mayor was not keen on allowing the First to run his municipal policy ever again.

The one form of leverage that the mayor had to push back against the bankers was his ability to effectively set the property-tax rate for new business development: a rate that the bankers needed his approval to keep low.Footnote ¹⁹¹ Under the Massachusetts Constitution, cities were supposed to send assessors once a year to assess the market value of all property and tax it all at the same percentage of that value, whether the property was an old house, new construction, or a business.Footnote ¹⁹² But cities routinely flouted this requirement by assessing new business development at an artificially low value or by refusing to reassess the homes of established residents after the market value of their homes had increased.Footnote ¹⁹³ This politically expedient practice had the effect of keeping taxes low for desirable development or for residents who did not move. But out-of-favor business owners and new residents paid higher taxes on their correctly valued property. In a 1961 lawsuit, the Supreme Judicial Court held that a city's refusal to assess the market value of all its property and tax it all at the same rate was unconstitutional.Footnote ¹⁹⁴ And on Christmas Eve 1974, after only half of the commonwealth's cities had revalued their property, the court ordered the remaining cities, including Boston, to do so as well.Footnote ¹⁹⁵

Mayor White thought this decision was “the worst disaster the city has faced for 50 years.”Footnote ¹⁹⁶ Revaluing some of the city's old residential property for the first time in decades had the potential to raise residents’ taxes to unaffordable levels, kicking them out of their homes. Taxing new development at market value could discourage construction and eliminate the mayor's main form of leverage against bankers at the First. Established business owners, who in general would pay lower taxes, would reap the rewards: a member of the mayor's staff estimated that “100% valuation,” as it was known, would shift $250,000,000 in property taxes from businesses to homeowners.Footnote ¹⁹⁷ This outcome was politically intolerable for the mayor, who proposed a constitutional amendment “that would allow assessment of property at different percentages of valuation according to their use.”Footnote ¹⁹⁸ The mayor hoped to constitutionalize the now-illegal practice of “classification”: taxing some businesses at a higher rate than residences. His critics in the business community called this plan a “graduated property tax.”Footnote ¹⁹⁹

The mayor began his campaign in January 1975, lobbying other mayors, legislators, and even business owners to support his proposed classification amendment.Footnote ²⁰⁰ The mayor did not do this by himself. An investigation by the state finance commission revealed a “systematic and widespread assignment of city employees from various departments to assist, during working hours, in the mayor's effort to obtain constitutional or legislative repeal of 100% valuation.”Footnote ²⁰¹ The mayor responded brusquely: “The public has the need to be informed and the right to be informed and it is the government's obligation to meet this need. Neither the media nor the Chamber of Commerce, nor any other civic or quasi-governmental agency can speak for the government. It must speak for itself.”Footnote ²⁰²

Nevertheless, the mayor laid low until the referendum was finally scheduled in 1978. As that year began, the Chamber of Commerce and the Real Estate Board began “marshalling business leaders across the state to campaign against the amendment,” pledging an “[a]ll-out fight.”Footnote ²⁰³ The mayor responded by mobilizing the Massachusetts Mayors Association. “As you know, there will be a single agenda item,” he wrote in his invitation for them to meet: “the Classification Amendment, and what we as Mayors can do to help assure its passage.”Footnote ²⁰⁴

“[A]nticipating a major battle with the Massachusetts business community,” Mayor White prepared for the March meeting as if he were preparing for combat.Footnote ²⁰⁵ An advisor suggested that the mayor might be able to even the playing field if he could allocate “public money” from “various cities and towns.”Footnote ²⁰⁶ In March 1978, one of the mayor's aides followed up on this suggestion by contacting Laurence Tribe, a young professor at Harvard Law School who had recently published a highly praised treatise on American constitutional law.Footnote ²⁰⁷ Tribe responded with a memorandum suggesting that Boston probably could spend money in support of the referendum.Footnote ²⁰⁸ He noted that Massachusetts had a statute permitting cities to lobby the legislature, implying that cities could spend at least some public dollars on political advocacy.Footnote ²⁰⁹ At the same time, Tribe warned the mayor that “[t]he precise issue” had “not been addressed in Commonwealth courts” and had been expressly rejected in other states.Footnote ²¹⁰ Tribe concluded that a public expenditure would have the highest chances of being upheld if it served the “vital needs of the municipality's residents” and did not help the mayor personally.Footnote ²¹¹

Later that month, the mayors met and unanimously elected Mayor White to run the campaign.Footnote ²¹² They approved his battle plan calling for a statewide “speakers bureau” of “well-informed administration members, citizens, and other mayors”; a “bumper sticker blitz”; neighborhood hearings; and a fundraising drive to build “a $200,000 private war fund.”Footnote ²¹³ The mayors also agreed to take advantage of their public offices to support the campaign.Footnote ²¹⁴

Mayor White took things further. He pledged to put some of his city's 12,000 employees to work on the issue, despite past criticism. “I don't think we'll be able to spend what they can, but we've got bodies,” he explained.Footnote ²¹⁵ Mayor White also enclosed a leaflet in the city's tax bills promoting the amendment: a request his opponents complained was not “a fair expenditure of taxpayers’ dollars” unless they got “equal time.”Footnote ²¹⁶ Most controversially, Mayor White promised to spend $800,000 in taxpayer money to prepare “educational material for the public.”Footnote ²¹⁷ In private, however, the mayor and his aides admitted that “we have no present capability” to fund a political campaign.Footnote ²¹⁸

The mayor gained some confidence on April 26, when Justice Lewis Powell announced the Supreme Court's decision in First National Bank v. Bellotti.Footnote ²¹⁹ Reading the opinion, the mayor realized how he would pay for his campaign. The Court appeared to have declared that the First Amendment protected all political speech, even if the speaker was a corporation, and even if some shareholders objected. As someone familiar with Boston's corporate status, Mayor White was ready to capitalize.

The next day, in a meeting of the Massachusetts Mayors Association, Mayor White told the other mayors that it was time to appropriate funds to support a campaign on the referendum. Bellotti, he said, was “one of the most significant happenings in American life in the last 10 years. … You talk about the Vietnam War. Well, that was the Tet Offensive.”Footnote ²²⁰ The mayor and his allies anticipated that banks would spend “tax-deductible money” to fight the classification amendment, and he had no intention of laying down his own tax-powered arms.Footnote ²²¹ “It's a critical issue to everyone,” the mayor told the group. “And we'll all have to have the guts to go before our councils and ask for help.”Footnote ²²²

With an announcement that sounded like a declaration of war, Mayor White asked Boston's City Council to appropriate $1,800,000 for the campaign. Calling his request “the most important single budget request of the last decade,” the mayor asked the council to fight “the most serious threat to the well-being of our constituents since I've been in office: 100% valuation.”Footnote ²²³ “Although it is clearly in the voters’ interest to approve” the classification amendment, the mayor said, “the forces of opposition are numerous and well-armed.”Footnote ²²⁴ In particular, as a result of Bellotti, he expected business corporations to spend $15,000,000 to reap the $250,000,000 tax shift that revaluation promised business owners.Footnote ²²⁵ “Someone must speak for the city,” he said. “No one else will adequately represent the public.”Footnote ²²⁶

The city council—which had lived with Mayor White's shenanigans for a decade—was alarmed. “I don't think we should be using public funds for an effort that I sincerely believe is an effort to reelect the mayor,” said Councilwoman Rosemarie Sansone.Footnote ²²⁷ Councilman Lawrence DiCara added, “If the mayor is allowed to spend money as only he sees fit, then it'll set a precedent that we will regret until hell freezes over.”Footnote ²²⁸ Councilman Raymond Flynn asked, “If we spend money on this issue, why not spend it to promote abortion, busing, birth control?”Footnote ²²⁹ The three councilors all supported classification, but feared the mayor would exploit their approval for his personal ends.

In an editorial titled “It's Your Money, Not His,” the Boston Herald American called the request an “outrageous ploy,” the best example yet of the mayor's “I-know-what's-good-for-you-and-the-hell-with-what-anyone-else-thinks” attitude.Footnote ²³⁰ “Whether [classification] is a good idea or a bad one is beside the point. Obviously it is very controversial. … But the mayor plans to spend nearly $2 million in tax money collected from proponents and opponents alike to underwrite a one-sided propaganda and lobbying campaign to buy votes for the amendment. That is wrong and unfair.”Footnote ²³¹ In response to White's claim that public funds would offset private business money, the Herald was dismissive. “[T]hat is their money, and presumably it won't be spent without the approval of the owners or stockholders.”Footnote ²³²

Of course, the mayor's opponents were absolutely planning to spend “private business money” without the approval of owners or shareholders, just as they had in the past. The First, for example, contributed $15,000 to the newly formed Committee Against Property Tax Discrimination without ever notifying shareholders that it had done so.Footnote ²³³ The bank's shareholders only learned about the contribution after the press publicized the committee's campaign finance filings. And even then, there was not much anyone could do about it. One group of protestors tried to crash a board meeting but were turned away by guards.Footnote ²³⁴ When a “senior vice president” agreed to meet with the group the following week, he “pleaded ignorance” of the bank's contributions.Footnote ²³⁵

None of this stopped members of the business community from criticizing the mayor. “Obviously we're not very happy with what we perceive to be the impact of classification to begin with, so the mayor's use of tax funds to lobby a supportive position on classification really is something of an anathema to us,” said William Chouinard of the Chamber of Commerce.Footnote ²³⁶ Herbert Roth, the Chairman of the Committee Against Property Tax Discrimination, was more optimistic. “The more he spends, the less I think I have to spend because I think, quite frankly, people are going to see the abuse in the use of public money and personnel,” he said. “Maybe if we get him up to $2 million, he'll win the campaign for us.”Footnote ²³⁷

Despite the negative publicity, on May 17, members of the city council voted 6–3 to approve the “concept” of spending public dollars on a statewide referendum. “I'm frightened by the idea of spending taxpayers’ money,” one of the councilors who voted in favor of the bill explained. “But if we don't spend anything, we'll be defenseless against the business interests. I think we owe it to taxpayers to put up a creditable fight.”Footnote ²³⁸ The mayor's principal supporter, Councilman James Michael Connolly, agreed that without public funding, the opponents of the amendment would “win by default.”Footnote ²³⁹ But on May 24, the council reconsidered its approval, deciding to hold neighborhood hearings on the issue.Footnote ²⁴⁰

Mayor White's office took these hearings seriously, organizing nearly 100 homeowners and civic leaders to testify at what opponents called an “orchestrated performance on behalf of the mayor.”Footnote ²⁴¹ “There is no way we're going to win this amendment without the use of public funds,” one homeowner testified.Footnote ²⁴² “For God's sake, give us an equal chance with the big money interests to wage a decent battle on this thing,” said another.Footnote ²⁴³ “I care not what the mayor of Boston intends to do,” said a third. “We're trying to save our homes.”Footnote ²⁴⁴

The hearings proved successful. After negotiating an “iron clad guarantee” that the mayor would not use any public dollars “for the promotion of any individual,”Footnote ²⁴⁵ on June 8, the city council voted to appropriate $975,000 toward the classification campaign.Footnote ²⁴⁶ On June 14, at a meeting of the Massachusetts Mayors Association, the mayor pledged $112,000 as Boston's share toward a statewide “information campaign.”Footnote ²⁴⁷ The other mayors agreed to contribute similar amounts on a “prorated, population-formula basis.”Footnote ²⁴⁸ The mayor kept his earlier promise to enlist public employees, asking 10,000 staff members to “volunteer” 3 hours each workday, and more on days off.Footnote ²⁴⁹ One of the mayor's aides privately conceded that his use of city resources “sounded like the Mayor is only after power.”Footnote ²⁵⁰ But there was a “method to the Mayor's madness,” an “underlying moral vision for the City … that at least he is using power in [residents’] interests.”Footnote ²⁵¹

Meanwhile, the opponents of classification escalated their attack. One of Ephron Catlin's old allies organized ten taxpayers, including an employee of the First, to sue the city.Footnote ²⁵² Led by the executive director of the Committee Against Property Tax Discrimination, Richard Anderson, the plaintiffs argued that the city's political spending violated state law and their First Amendment rights as dissenting taxpayers.Footnote ²⁵³

At a June 30 preliminary hearing before the Supreme Judicial Court, the city's new attorney, Laurence Tribe, promised that the city would not spend any more public funds to promote the amendment's passage while the suit was pending.Footnote ²⁵⁴ That same day, however, the mayor sent the city's $112,000 contribution to the Massachusetts Mayors Association.Footnote ²⁵⁵ He also spent $123,000 on a consulting firm to train campaign workers and $100,000 on a California advertising firm that had recently convinced taxpayers there to support Proposition 13, the notorious referendum that had slashed that state's property taxes.Footnote ²⁵⁶

The fact that the mayor's first expenditure was for the same firm that successfully promoted Proposition 13 was no coincidence.Footnote ²⁵⁷ Tax reform had become a front-page issue across the nation in 1978, the latest wave in an extended backlash to the post–New Deal consensus that governments, unions, corporations, and other large institutions could cooperate to resolve persistent social problems.Footnote ²⁵⁸ But where Democratic politicians typically feared Proposition 13 as a sign that white, homeowning taxpayers were becoming uncomfortable with large institutions like government, Mayor White saw classification and tax reform generally as an opportunity to emphasize that large municipal corporations were much more responsive to constituent concerns than large business corporations; and that if taxpayers had to choose sides, they should pick the side that was actively soliciting their viewpoint. He also saw the campaign as a chance to help himself: a modern, technocratic civic leader.Footnote ²⁵⁹ In the words of Jack Lew, a member of the mayor's staff who would later serve as secretary of the treasury under President Barack Obama, “an aggressive campaign for classification, combined with an aggressive campaign to articulate the Mayor's long held commitment to progressive social values and goals, especially at a time when others are abandoning those goals, will sit well with the public, at least by 1979.”Footnote ²⁶⁰

In court, the mayor's lawyer, Laurence Tribe, made a spirited argument for why “the public voice of the Amendment's proponents” should not be silenced while the “privately financed opponents” of the classification campaign proceeded under Bellotti.Footnote ²⁶¹ Unlike the First National Bank's lawyers, Tribe emphasized the people whom the mayor represented, and argued that the municipal corporation was the only medium through which they could speak as a coherent community. Tribe called the city a “body politic composed of the individual inhabitants within its corporate confines,” an “aggregate” of individuals who elect representatives to advance and protect their interests.Footnote ²⁶² The municipality provided “a voice for the people of Boston” to express themselves to the rest of the commonwealth.Footnote ²⁶³ The reason the city had a First Amendment right to spend taxpayer dollars on a political issue, Tribe wrote, was because its residents had that same right, which they did not give up by forming a city.Footnote ²⁶⁴ And although it was imaginable that a mayor could abuse this right—with retaliation, coercion, or self-perpetuation—“the political process itself can police excess; blatant abuses will win little favor when incumbents seek re-election.”Footnote ²⁶⁵

In other words, without using the term “corporate democracy,” Tribe was arguing that the city's shareholders would police the mayor just as Justice Powell had declared that shareholders would police the executive vice president of the First National Bank. But Tribe's optimism was a little more rooted in reality. After all, where Ephron Catlin had spent thousands of dollars in secrecy without consulting even the First's board of directors, Mayor White had made speeches, held public hearings in neighborhoods, and convinced the city council to approve his spending decisions multiple times.

The taxpayer opponents also focused on Boston's citizens. They argued that the city's public spending unfairly benefitted one group of residents (homeowners) at the expense of another (business owners). It “str[uck] at the heart of the electoral process” for the city to spend resources advancing “the political views of one group of taxpayers over the other,” they argued, especially when it was done in a manner that “gives the dissenters no opportunity to present their side.”Footnote ²⁶⁶ Echoing the Supreme Court's decision in Hunter v. City of Pittsburgh, the taxpayers argued that the city was not just any corporation, but part of the commonwealth's “government”—and that government had a constitutional “duty of impartiality.”Footnote ²⁶⁷

The court agreed with the taxpayers.Footnote ²⁶⁸ In its opinion, Anderson v. City of Boston, the court assumed that the city had a First Amendment right to spend money on a political campaign, but thought that the commonwealth had several compelling reasons to silence the city's speech. The most intuitive of these was the same as in First National Bank v. Bellotti: protecting a dissenting minority of taxpayers when the “affected citizenry are not in unanimity.”Footnote ²⁶⁹ The court conceded that there are “a variety of instances in which government funds are used lawfully to express views on matters of importance where various taxpayers may disagree with those views and conclusions.”Footnote ²⁷⁰ But the court thought that spending money on a political referendum went too far. In particular, the court thought that it would be coercive to make “real estate taxpayers such as the plaintiffs” literally flee the city to “avoid the financial consequences of the city's appropriation of funds.”Footnote ²⁷¹

Mayor White appealed to the Supreme Court, and once again, Tribe framed the issue in terms of the representative relationship between the city and the people who composed it.Footnote ²⁷² The residents of the city were “members of an organized society, united for their common good, to impart and acquire information about their common interests” he explained.Footnote ²⁷³ In this respect, the people of Boston were no different from the members of the NAACP, the editorial board of the New York Times, or the shareholders of the First National Bank, all of whom the Supreme Court had allowed to “speak” through an institutional voice.Footnote ²⁷⁴ But the people of Boston had an even greater right than those corporate members to elect a representative who could articulate their “public voice.”Footnote ²⁷⁵ As the mayor put it during a (mandatory) 3 day staff retreat to Thompson's Island,Footnote ²⁷⁶ his corporation was acting in “the public interest,” whereas those corporations represented “mass power,” with “no nerve cells—no roots” and no accountability “to the public.”Footnote ²⁷⁷

Tribe's most significant argument was his response to the intuitive idea that it was unfair for a city to spend taxpayers’ money on issues that many taxpayers disagreed with. He wrote that this idea was actually counterintuitive, because governments simply could not operate if dissenting taxpayers were “entitled by the First Amendment to silence government advocacy with which they disagree.”Footnote ²⁷⁸ Seeking to turn a liability into an asset, Tribe rattled off a list of examples in which it would “prescribe paralysis for modern government” to prohibit it from taking one side in a public debate, from “opinions of courts, … published at taxpayers’ expense,” to presidential press conferences “paid from public funds.”Footnote ²⁷⁹ Funding objectionable ideas is part of what it means to be a member of a democracy: you win some, yes, but you lose some too. Crucially, unlike Catlin or Powell, Tribe was not simply offering the existence of democracy as a check on an otherwise uninhibited leadership. He was arguing that democracy itself required allowing the mayor of Boston to speak on behalf of the pluralistic institution he represented.

The Supreme Court finally weighed in on October 20, a week and a half before the November referendum. In a one-justice order, William Brennan ordered Massachusetts to allow Boston to spend public funds for the remainder of the campaign. “In light of Bellotti, corporate, industrial, and commercial opponents of the referendum are free to finance their opposition,” Justice Brennan wrote. “[U]nless the stay is granted, the city is forever denied any opportunity to finance communication to the statewide electorate of its views in support of the referendum as required in the interests of all taxpayers, including residential property owners.”Footnote ²⁸⁰

Justice Brennan's stay changed the tenor of the campaign. Before, the city was fighting a battle between the “little people against the big Boston corporations.”Footnote ²⁸¹ Suddenly, the proponents of classification had a lot more money than the $400,000 raised by the Committee Against Property Tax Discrimination. By November, classification was “one of the most expensive referendum questions ever put before the voters of Massachusetts,” with a “media blitz that is dwarfing the races for senator and governor in the campaign's final weeks.”Footnote ²⁸² The issue was now a contest between the “million dollar” mayor and the millionaires; “big government against big corporations.”Footnote ²⁸³ As a reporter for the Washington Post observed, “[T]here's an unusual wrinkle to the Massachusetts brand of tax rebellion. … [T]he consumer side has nearly all of the troops and, surprisingly, most of the money.”Footnote ²⁸⁴

The final days of the classification campaign became a referendum not over taxes, but over the legitimacy of Mayor White's public spending. “Mayor White is spending a million dollars of taxpayers’ money,” one advertisement said. “Are you going to let him stampede you into voting for it?”Footnote ²⁸⁵ Richard Anderson, the lead plaintiff in the lawsuit against Boston's public spending, argued that the mayor “should state in his advertising that they have been paid for by White with public money from Boston taxpayers.”Footnote ²⁸⁶ For their part, Mayor White's supporters also attacked his opponents more than they discussed the nuances of classification. “When the banks are donating money to protect us, that will be the final day of judgment,” one homeowner said. “So just ask yourself, who's for it and who's against it?”Footnote ²⁸⁷

In the end, the mayor won the referendum by a landslide. In his victory speech, he celebrated defeating “a general distrust of politicians, a four-year process of initiating constitutional amendments that invited voter apathy, 10 taxpayers who gagged us until the last week and a half of the campaign, and a massive opposition media campaign.”Footnote ²⁸⁸ He also made it clear that the city's “voice” was louder than his own.Footnote ²⁸⁹ It was the people, “band[ed] together,” who spoke through the city.Footnote ²⁹⁰ The mayor was a mere advocate, one who made it “possible for the people's case to be heard.”Footnote ²⁹¹

III

After the campaign was over, when residents, journalists, and legal scholars had a chance to reflect on what had just happened, there was a sense that “troubling issues raised during the battle remain[ed] unresolved.”Footnote ²⁹² If Boston could continue spending money on political campaigns, the Globe editorialized, a Boston property owner could soon “find his own tax money used to fight against his own interests.”Footnote ²⁹³ His only recourse would be either to move or to vote Mayor White out of office. And as difficult as moving sounded, voting Mayor White out of office could be even harder if the mayor used “public funds for all kinds of partisan ends, including self-perpetuation.”Footnote ²⁹⁴ “For example, an incumbent administration could use public money to win changes in local government charters favorable to its political interests”; no idle threat in light of Mayor White's charter-reform campaign of 1976.Footnote ²⁹⁵ Or the incumbent might “mold[] city workers into a campaign organization,”as Mayor White had just done.Footnote ²⁹⁶ The editorial board was pleased with the mayor's classification victory, but it feared that his conduct “could establish unfortunate precedents and invite future abuses.”Footnote ²⁹⁷

At the same time, the Globe’s editors were not ready to write off public spending completely. After all, as a result of First National Bank v. Bellotti, those same Boston property owners could find their investments or bank accounts being used to fund a business corporation's attempt to raise their taxes.Footnote ²⁹⁸ Although they could try to move their investment portfolios or do business with another bank, they could not realistically influence the content of the bank's advertisements.Footnote ²⁹⁹ “Corporate democracy” was a “fairy tale,” the Globe wrote.Footnote ³⁰⁰ “[W]ith much of the nation's corporate stock held by pension funds and insurance companies, and with most of the stock in any national corporation held by persons residing outside any given state, it is hard to see how such a system would work, even in theory.”Footnote ³⁰¹ “In fact, the only place it might work is in a municipal corporation—like Boston.”Footnote ³⁰² Even the opponents of classification “would have to acknowledge they have more control over city spending on political questions than do foes of political spending by private corporations.”Footnote ³⁰³

As the Globe’s editorial board recognized, despite the many differences between the city of Boston and the First National Bank of Boston, they both posed the same problem. The First Amendment protects “the freedom of speech,” a right that protects voluntary self-expression, consensual self-government, and deliberate participation in the marketplace of ideas. But the bank and the city were both corporations. Neither could speak or express themselves, at least not literally. Instead, their speech involved one person spending other people's money without first receiving their express consent.Footnote ³⁰⁴ The challenge for everyone, from the residents of Boston to the justices of the Supreme Court, was to figure out whether that consent was implied or whether the absence of consent was forgivable.

S. Prakash Sethi, a business professor writing in the Wall Street Journal, framed the problem well. He argued that the referendum presented two independent issues. The first was “a corporation's right to political speech”; that is, whether it was appropriate for a group of people to take advantage of incorporation in order to effect political change. The second was “the management's right to speak on such issues on behalf of the shareholders”; that is, whether it was appropriate for a few people among that group to spend the group's resources to advance their own political views. Footnote ³⁰⁵ He considered the second issue more important—as did an anonymous editor of the Harvard Law Review the following year. “When corporations ‘speak,’” the editor wrote, there was a difference between “those situations where a corporate body communicates a political message on behalf of all of its members with their specific and immediate consent, and those situations in which a few individuals commanding an organization use other people's money and labor to amplify their own voices.”Footnote ³⁰⁶

In other words, the central normative question underlying Ephron Catlin's attempt to spend the First's money and Mayor White's attempt to spend Boston's money was whether the executives were acting in a representative capacity when they purported to speak on others’ behalf. In a corporation such as the NAACP, the New York Times, or even Citizens for Economy in Government, the answer was intuitively yes: each of these corporations had been chartered for the purpose of amplifying the political voices of their membership. No one had any doubt that contributors gave these organizations money with faith that the corporate executives’ political perspectives would, for the most part, match their own.Footnote ³⁰⁷ But this intuition was weaker in a business corporation such as the First National Bank, whose “membership” could be said to include its many stockholders, employees, customers, and creditors who did not have a meaningful say in choosing the bank's official political perspective.Footnote ³⁰⁸ And it was perhaps weaker still in a municipal corporation such as the city of Boston, whose residents did vote for the mayor, but not so that he could spend their dollars on a political project that appeared to benefit himself as much as it did taxpayers.

What Boston did show, however, was that this normative issue of consensual representation exists across all corporations. It was easy for observers to see that Mayor White had approximately the same relationship with the people who lived and worked in Boston as Ephron Catlin had with the shareholders and customers of the First National Bank. It also became easy to see that just because both were elected—however indirectly—to lead their respective corporations, the elections did not mean that voters trusted them to wield unlimited power and uninhibited discretion. As critics familiar with Mayor White's attempts to entrench himself recognized, “there is no assurance that governments truly represent majorities in the absence of informed consent to governmental policies.” Crucially, this was true for “corporate democracy” in business corporations as well.Footnote ³⁰⁹

This lesson has been largely forgotten among constitutional scholars in the years since 1978, perhaps because Boston's victory before the Supreme Court was short lived.Footnote ³¹⁰ When Justice William Brennan issued his October 1978 order allowing Boston to spend public funds on the referendum, he expected that four other justices would vote to exercise the Court's discretion and hear the city's appeal the following year.Footnote ³¹¹ But in January 1979, six of the nine justices flouted Justice Brennan's prediction and, over his dissent, voted to dismiss Boston's appeal on the ground that it failed to raise a “substantial federal question.”Footnote ³¹² Such a dismissal was ambiguous; the Court didn't give a reasoned opinion, and it could have decided that the issue was “moot,” or no longer relevant, because the campaign was over.Footnote ³¹³ But in practical terms, the dismissal let stand the decision of the Supreme Judicial Court of Massachusetts, which had prohibited Boston from spending money on future political campaigns.

In the four decades since then, two things have made the issue of consensual representation in business corporations just as important as it is for cities. First, in 2010's Citizens United v. the Federal Elections Commission, the Supreme Court cited First National Bank v. Bellotti more than thirty times to strike down a federal ban on corporate political expenditures.Footnote ³¹⁴ The decision overruled a half dozen cases in the 1980s and 1990s that had upheld bans on corporate spending because states such as Massachusetts had offered compelling interests in “ensur[ing] that persons connected with the organization will have no economic disincentive for disassociating with it if they disagree with its political activity.”Footnote ³¹⁵ In Citizens United, by contrast, Justice Anthony Kennedy quoted First National Bank to write that the corporate “identity” of a speaker should not determine whether its speech is protected by the First Amendment: “Political speech is ‘indispensable to decisionmaking in a democracy, and this is no less true because the speech comes from a corporation rather than an individual.””Footnote ³¹⁶ And when Justice Kennedy confronted the same argument that Massachusetts had made in defense of dissenting shareholders, he again quoted Justice Powell: There is “little evidence of abuse that cannot be corrected by shareholders ‘through the procedures of corporate democracy.’”Footnote ³¹⁷

Second, drawing on Laurence Tribe's argument that cities and other governments require wide latitude to spend taxpayer dollars on controversial messages,Footnote ³¹⁸ the Supreme Court has developed a “government speech” doctrine, holding that “government would not work” were it constitutionally prohibited from compelling citizens to do or pay for things they might not like.Footnote ³¹⁹ This rule makes sense; just think of the consequences if taxpayers philosophically opposed to recycling could sue a city government for violating the First Amendment whenever it passed an ordinance urging people to reuse paper bags.Footnote ³²⁰ But the rule has also led numerous cities to engage in political advocacy similar to Boston's, and a split has developed among state and federal courts over how to interpret City of Boston v. Anderson in light of this “recently minted” government-speech doctrine.Footnote ³²¹ A few courts have held that public spending in support of one side of an election is antidemocratic and presumptively unconstitutional. But most have accepted arguments similar to the ones Tribe made, holding that taxpayer-funded advocacy is not only constitutional but also commonplace. It is hard to distinguish between ordinary political advocacy, such as a taxpayer-funded press conference, and advocacy that might be unconstitutional because it is designed to entrench incumbents in power.Footnote ³²²

As state and local governments consider how to respond to this increased advocacy by both business and municipal corporations, the story of the 1978 referendum remains as relevant as ever. It shows that the question presented by corporate speech is not limited to “should corporations be allowed to speak?” It also must include “what does it mean for a corporation to speak?” Answering that question makes it clear that corporations are fundamentally representative institutions, ones in which a vocal person purports to represent a silent group. This is obvious in a municipal corporation such as Boston. But, as it happens, a bank such as the First might have as much use for checks and balances as any other democracy.