But Ranney did not seem conservative to his fellow convention delegates. He made clear his Radical Democratic proclivities from the start. The statute that provided for the holding of the convention directed the delegates to secure for the state the copyright of the report of the debates and proceedings. Whig Henry Stanbery offered a resolution declaring it “inexpedient” for the convention to comply with the statute. Pursuant to the statute the convention had already provided for the daily publication of the debates in the Ohio State Journal and the Ohio Statesman. Once the debates were published in the papers, said Stanbery, it was too late to secure the copyright. Furthermore, there was “a higher object than profit” in the publication of the debates: to inform the people as fully as possible of proposed changes to the constitution. Ranney agreed with both points, but in the creedal anti-monopoly and laissez-faire language of Radical Democrats. He questioned whether the debates of public bodies could be “put under the screw of monopoly” and doubted that the state would profit from sales of the books. “We have already tried our hands in several schemes for making money, in constructing roads and canals, besides a variety of other things, in all of which the State has failed to prosper” (1:18, 60–61, 83–84).11
About a month into the convention, Ranney set forth his political principles in arguments over the report of the committee on nonbanking corporations. Many Democratic delegates displayed deep hostility toward business corporations. Animosity toward banks had been a staple of mainstream Democratic rhetoric since the 1830s. Other corporations, especially those created for the purpose of constructing roads, bridges, or canals, tended to be seen as quasi-governmental in nature and thus attracted less criticism, at least before the Panic of 1837. The General Assembly spent much of its time before 1850 enacting or amending special laws that granted corporate charters. The charters of business corporations often included “special privileges,” such as the power to take property through eminent domain, the limitation of shareholder liability for corporate debts, or freedom from competition. After the Panic of 1837 and the heavy losses sustained by the state and by local governments that had invested in corporate enterprises, many Democrats developed a burning antipathy toward corporations. At the constitutional convention, they strove to put limits on corporate power into Ohio’s fundamental law.12
The debates over business corporations occupied much of the convention’s time. Ranney spoke out forcefully and with his wonted acerbity on two significant issues, the liability of shareholders for corporate debts and the power of the legislature to repeal corporate charters. Jacksonian Democrats had long appealed for support to independent artisans and shopkeepers whom corporate enterprise threatened to destroy. In 1835 Connecticut Democrat Gideon Welles warned that “[t]he unobtrusive work-shop of the Mechanic, the residence of freedom, is beginning to be abandoned, because he cannot compete with incorporated wealth.” Corporations, Welles continued, were “destroying that equality of condition, which is the parent of independence.” Individuals could not hope to compete with capital “entering the field, under privileged laws.” Less than two years after the Ohio constitutional convention adjourned, the Democratic United States Review complained that the incorporation of manufacturing companies had concentrated capital and labor in a few hands, whereas previously these resources had been “diffused among all classes, and contributed equally to the prosperity of millions of industrious people,” who were “always improving their condition.” Corporations had “banished the loom and the spindle from the fireside,” driven housewives and mothers out of their homes and into factories, and turned independent mechanics, previously the “sole masters of their time and of themselves, into slaves of the steam-engine and spinning-jenny.”13
Ranney declared that he had no objections to corporations created for “proper purposes,” by which he seems to have meant the construction of “public improvements”—he himself had recently been among the incorporators of two plank road companies—but he feared that “their introduction into all the departments of ordinary business” would “depress private enterprise, and break down men of small capital.” Without protection from the aggrandizement of corporations, said Ranney, mechanics (artisans) and small businessmen would soon be compelled “to find employment under the overshadowing power and influence of associated wealth.” The growing tendency “to engulph every branch of business in the vortex of corporations” had to be resisted with “guaranties against their frauds.” Two of the most important of these guarantees, he insisted, were shareholder liability and the right of repeal. Writing these two protections into the constitution would go a long way toward making “[e]qual rights to all, exclusive privileges to none . . . an operative, living principle” (1:370).14
The first report of the committee on corporations other than banks proposed changing the method of creating corporations. The General Assembly would no longer be able to grant corporate charters by special acts of incorporation. Instead, it would have the authority to pass general laws under which any group of individuals could set up a corporation. However, all such general laws might “be altered from time to time, or repealed.” Upon repeal, “the property or credits legally acquired” by the corporation would “rest in the individual corporators, subject to the liability of the corporation.” The liability of each incorporator or shareholder would never be less than the amount of stock subscribed by that individual. Despite his concern that general incorporation laws would encourage the proliferation of corporations, Ranney reluctantly assented to the idea because they would eliminate legislatively granted monopolies and allow anyone who wanted to form a corporation to compete on an equal basis (1:260, 369–70). But he believed these provisions to be inadequate protections against corporate rapacity.
On its face the clause establishing minimum shareholder liability allowed the legislature to saddle shareholders with full liability for corporate obligations. Critics of the clause, though, took it for granted that the minimum would prove to be a maximum.15 And if a shareholder’s maximum liability were the amount of his investment, a corporation could run up enormous debts, beyond the value of its outstanding shares, while those individuals who owned the corporation would escape responsibility to the creditors. (The owners were not the thousands or millions of anonymous shareholders who invest in giant corporations today; they were usually a relative handful of men personally involved in the operations or general oversight of the business.16) Ranney moved to amend the report to make each shareholder liable for double the amount of his or her shares, and, in the case of a business corporation that was not created “to construct public improvements,” the stockholders would be “individually liable for all the debts and liabilities” of the corporation (1:369).17
Ranney thought it outrageous that every individual or group of individuals associated for business purposes except those with a charter was fully liable for debts incurred. A merchant who lost a ship or a farmer whose crops were ruined by drought had no exemption from liability, he observed, but a shareholder had the shield of corporate privilege. The shareholders might have taken five times the amount of their stock subscriptions in dividends or profits, but once their stock was gone, their liability was gone. They could “revel in wealth and luxury, while hunger and destitution were grinding in the dust those who had labored for the corporation.” Ranney believed it useless to leave to the General Assembly the matter of liability beyond the amount of the stock subscribed. The shareholders of the numerous corporations formed under general corporation laws would all seek to avoid liability. “They will be in the ear of every member before he comes here, and in his bed after he comes here, if necessary to effect their ends. They will be able to form the most powerful combinations, and raise any amount of money required for corruption purposes.” There would be no hope for “legislative purity” or “honest principle” (1:371).
Members of both parties questioned whether any capitalist would invest in a corporation without knowing the limits of his liability. Democrat Edward Archbold even denied that individual liability, as proposed by Ranney, was sound Democratic