Greetings, I hope this finds you well. I wanted to bring a recent piece of news to your attention, as it bears on the General Assembly’s treatment of corporate law.
Here’s the thing, though: Andreessen Horowitz (AH Capital Management) is not a Delaware corporation. It’s a Delaware LLC.
As a limited liability company, it can’t “move” its incorporation anywhere; it doesn’t exist. More to the point, none of Andreessen Horowitz’s complaints about Delaware apply to their firm, or to any of the subsidiaries they have registered here as LLCs or Limited Partnerships (LPs), as a quick search of the DE Division of Corporation Business Entity Filing database will attest. This distinction is not a mere matter of synonyms, but one with material consequences for how a business operates. As legal scholars have observed, “An LLC By Any Other Name Is Still Not A Corporation.”
It seems unlikely that the leaders of the world’s wealthiest venture capital firm cannot distinguish between two basic types of business entity structure. It seems equally unlikely, then, that Andreessen Horowitz’s decision to leave Delaware is motivated by their stated reasons. Their critique, in other words, appears to be made in bad faith.
As you and your colleagues contemplate further revisions to Delaware’s corporate law, I urge you to keep this evidence of deceptive arguments from Delaware’s critics in mind – whether they come from business owners, directly, or the locally influentiallegal advocates they employ.
Sincerely, your constituent, DN
NB: most of the outlets reporting on this move – NYT, Bloomberg, Inc – reproduce Andreessen Horowitz’s statement without comment, and thus its errors.
Or, How U.S. Steel Now Resembles the Royal African Company – and What That Means for American Democracy & American Capitalism
How does an autocrat affect the business world? As Leviathan thrashes his bulk and churns the seas, how many adventurers’ ships do his waves swamp and founder? And how might the folks interested in those ships attempt to appease Leviathan?
The US is six months into the MAGA Restoration, and having effed around, I think we’re starting to find out.
Left: Coat of Arms of the Royal African Company; Right: Logo of U.S. Steel
~~*~~
On June 18, 2025, Nippon Steel acquired U.S. Steel for $14.1 billion dollars, making the long-lived American industrial corporation into a wholly-owned subsidiary of the Japanese company. The deal to create the world’s second-largest steel operation was a long-simmering one, running over eighteen months, largely due to federal opposition on “national security” grounds, first from the Biden administration and then the Trump regime.
The impasse broke in mid-June, when the companies involved found a novel way to satisfy Trump’s vanity: they promised him a powerful, personal “golden share.” Journalists at the NYT, Bloomberg, WSJ and elsewhere all reported – seemingly only on the basis of company-issued materials – that holding this “Class G share” would grant President Midas-Touch unusual power over the operations of the new subsidiary, still to be named U.S. Steel.
“Nippon Steel and U.S.Steel struck a National Security Agreement with the US, in which US Steel will issue a so-called golden share to the government. The golden share gives consent rights to the US president concerning reductions in capital investments, changing US Steel’s name and headquarters, redomiciling outside the US, transferring jobs or production outside the US, acquisitions and decisions to close or idle existing facilities.”
Some context: a “golden share” is a special class of stock that allows its holder, typically a government, to outvote all other shareholders in some circumstances, like during proposed charter amendments. The term appears to date to Thatcher-era Great Britain, though the practice of a government assuring itself control of an important corporation by taking an ownership stake is far older (central banks, for example, often operate this way). In the contemporary moment, “golden shares” seem to function like a glitzed-up, nationalized version of the dual class shares that oligarchs, like Mark Zuckerberg and Warren Buffett, use to maintain personal control of their companies without tying up their capital in equity.
But while “golden share” structures are common outside the US – Brazil holds a “golden share” in aircraft manufacturer Embraer, the PRC owns shares of companies like ByteDance, etc – the arrangement is quite rare, and perhaps unique, in the US. Even when the federal government re-capitalizes failing companies, as it does during bailouts (e.g. GM’s after 2008, or any number of railroads, airlines, and financial institutions), US officials have stayed far away from using the resulting equity to assert control over operations, much less business strategy.
Instead, Article VI U.S. Steel’s new charter grants “Donald J. Trump” vast control over the operations of the company. While he is serving as president, “written consent of Donald J. Trump or President Trump’s Designee” is required for the corporation to: alter its charter, change the company name, move its headquarters out of Pittsburgh, re-domicile outside the US, change its capital investments, sell any production location, acquire any other company, implement price changes, accept financial assistance from the Japanese government, reduce employee salaries, or “make material changes to the Corporation’s existing raw materials and steel sourcing strategy in the United States.”[2]
When or if Donald J. Trump is no longer president – a future the new charter does not contemplate except by implication – these powers fall to the US Department of Treasury and the US Department of Commerce, though who within those departments can act, or how they are to act together, is unspecified.
So: Nippon Steel has provided a specific person, President of the United States Donald J. Trump, with governing power over their subsidiary corporation, a company worth (as of last week) $14 billion dollars. He holds this power not as an owner of equity, or as a director with fiduciary duties to equity owners, but simply by virtue of his office and political power.
To be blunt: is the kind of thing corporations do to satisfy autocrats. Only in a personalist dictatorship do you give the head of state a role in your foundational corporate charter; it’s a courtier’s pact, made to curry special favor, and bind a political patron to the business.
No, what’s odd about this U.S. Steel deal is that the Trump regime appears to have arranged personalized governing power over a corporation, without acquiring ownership. They seized the opportunity to assert sovereign authority over a national enterprise, through a single person, not an owner’s property rights. In U.S. Steel, they have recreated the powers of a king.
~~*~~
There are many ways to think about the shape that business takes in an autocracy. We don’t lack for models: from the Congo Free State under Leopold II to Jim Crow Mississippi to fascist Italy or today’s PRC, there are diverse examples of how capitalist expansion continues – and, arguably, thrives – under despotic rule of many different types and in many different places.
But this U.S. Steel disaster resonates with a deeper history, I think, the place and period of where capitalism first emerged, alongside – and in partnership – with ambitious autocrats: early modern England. At least, there seem to be several familiar chords in this music. First, in this period, the British (neé English) empire relied on corporations as a critical tool for colonial and commercial expansion – corporations that, for the most part, were created by the Crown, not Parliament. Second, the early British empire was quite unstable, riven by repeated cycles of revolution and restoration, coups and counter-coups – which provided lots of opportunities for negotiating and re-negotiating the relationship between state and corporations, monarchs and market institutions, and a lot of explicit writing and wrangling about what these relationships could, should, or did mean.
Finally, the autocrats of the period – and in particular, the well-coiffed but fragile-necked Stuart kings – provided the whetstone against which early Americans, and their political heirs, sharpened their ideas about liberty to a cutting edge. It’s a period rich in relevant material, as well as direct influence, on the politics of our present moment.
Which brings me to the Royal African Company. The RAC was a joint stock trading corporation with a monopoly on all English trade with West Africa. First granted letters patent (e.g. a charter) by Charles II in 1660 under the title “Company of Royal Adventurers into Africa,” it took on its more well-known name, and some additional powers, with a re-chartering in 1672. [3]
The RAC was, in many respects, a bog standard corporation of its time and place. It was one of dozens of companies chartered in 17th-century England, and like the Levant Company, the East India Company, or the Hudson’s Bay Company, its charter not only granted its associates unified legal personhood – and thus the ability to concentrate and deploy capital beyond the means of any one merchant – but also monopoly rights over a specific trading territory, and governing power there. Like these other companies, the RAC was explicitly a tool for colonization and imperial competition: it could establish forts, manors, and plantations, set up courts, and develop, marshal, and maintain military force on land and sea, as needed to fulfill that purpose.
While it’s fashionable in corporate law and finance circles today to approach corporations as organizations with ultimately “private” origins that the state must, reluctantly, regulate to maintain the basic health, safety, and financial transparency standards markets need to function, the RAC reminds us that this libertarian conception of corporate life is detached both from historical reality as well as the letter of the law. Like modern corporations domiciled in Delaware, the Royal African Company was a subdivision of the state, a temporary division of sovereign authority, granted to a body of subjects to accomplish a purpose – and therefore ultimately and always a creature of government, in all senses. [4]
Two things made the RAC unique, amid this host of incorporated adventuring companies. First, while the company’s initial business was the gold trade, it quickly – and quite successfully – expanded into slave trading. Indeed, a few years into its existence, the RAC became the dominant player in the trans-Atlantic traffic in human beings, and over its life it shipped more people across the Atlantic into chattel bondage than any other single institution. [5]
Second, from its first charter onward, the company’s lead founder and “first governor” (e.g. board chairman and CEO) was the king’s brother, James, Duke of York. And James… James was a special guy. Amid some serious competition from his grandfather, father, and elder brother, James Stuart, Duke of York and (briefly) King James II (of England and Ireland) and VII (of Scotland) distinguished himself for his zeal for building an absolute monarchy based on the divine right of kings – and, unsurprisingly, also by his penchant for cruelty and the brutal persecution of his critics.
While James II didn’t meet the sharp end his father did – he fled England before anyone could effect the traditional familial separation between head and body – his time as Duke and then King made a lasting impression on British political development, as an example of what not to do. Following his fall, the power of British kings was forever broken, more tightly circumscribed by law and kept in check by the active exercise of sovereign power by Parliament.
Why? Well, all the Stuarts had been committed a project of centralizing power under the Crown, and growing the monarchy’s bureaucracy at the expense of other governing institutions. Briefly checked by the loss of Charles I’s head and the interregnum, the post-Restoration Stuarts doubled down on the monarch’s right to arbitrary authority. So under Charles II, the monarchy took to simply disappearing troublesome subjects to foreign prisons “beyond the seas” – a practice Parliament attempted to circumscribe by legislating habeas corpus in 1679. And because James II was the last – and arguably the most aggressive – champion of this project, he receives particular opprobrium for it. As historian Holly Brewer has recently reminded us, James II expanded on his family’s efforts, efficiently corrupting the judiciary with patronage in order to remove any check on the monarch’s whims. (A tune that should sound familiar to modern Americans…)
But back to the RAC: James’s executive role in the company was not in name only. He used the company to advance his colonial projects all over the Atlantic world, as a means to supply the slaves that his colonial adventures in North America and the Caribbean needed to profit. And he also wielded state power on its behalf – directing the Royal Navy to seize African forts during wars against the Dutch, for example. (Among other wartime accidents, these Anglo-Dutch conflicts led to James, as the Duke of York, briefly becoming the proprietor of the tiny, failing sub-colony of Delaware – a disappointment to all involved, surely).
In practice and in theory, there was no clear line between the operations of the RAC as a capitalist enterprise, and James’s personal exercise of autocratic power. Indeed, they co-constituted each other – with humanity all the worse for it.
But what does the Royal African Company have to do with U.S. Steel? I would argue there is a similarity in political shape. The grant of governing power to a ruler is not an act undertaken in a political economy defined by free enterprise and universal rights; it’s not even the kind of play one makes in a robust oligarchy. Rather, it’s the move a board of directors makes when playing court politics, in a monarchy.
Too, the fact the Trump and his minions worked to produce this outcome – and not a simple bribe – makes it worse than bare graft. It’s an enactment of the MAGA Restoration’s theory of politics, of a piece with the anti-democratic philosophy the movement’s intellectuals advocate, the same philosophy that’s leading the regime to crush universities, the press, and tighten its chokehold on the federal courts and Congress. It’s a politics of absolute monarchy akin to what the Stuarts and their lackeys celebrated as divinely justified (an apologia constantly offered by Trump supporters, too). That autocracy has now come to corporate America.
But despite it’s best attempts, tyranny is never the only game in town. The House of Stuart was nearly a century fled from Britain’s empire, and their pretense to rule equally dead, when the American Revolution took its first percussive bloody breaths on Lexington Green. And yet, the Stuarts’ shade remained, substantial enough to cast a defining shadow when American patriots submitted a “history of repeated injuries and usurpations” to a “candid world” to demonstrate the “absolute Tyranny” of King George III. As they sought to justify themselves for rising to rebellion and declaring independence by reference to the King’s outrageous acts (like “transporting usbeyond Seasto be triedfor pretended offences”) American revolutionaries recalled and remade a political language first articulated by by a group of seventeenth century anti-Stuart partisans, the “Country Whigs,” within a broader European discourse about the necessarily popular roots of political order and legitimacy (e.g. “republicanism”). Stuart tyranny was the lens through which revolting colonials observed the actions of King George and Parliament, and it served as the foil to the English liberty they sought to restore through rebellion.
Americans identified the dangers of arbitrary monarchical rule in part through its corporate manifestations. The Tea Act, the legislation granting the East India Company a monopoly on tea sales in North America and laying a small tax on tea to pay for government bureaucracy, was condemned by Massachusetts Whigs as a “master-piece of policy for accomplishing the purpose of enslaving us.”[6]
That sounds like a wild overreaction to tax policy – and a weird reason to destroy millions in fragrant property – until you understand that like other British colonials, Massachusetts activists saw political events through the lens of Stuart abuses. A corporate monopoly, designed to generate taxes to fund state action, wasn’t just a discrete policy, but a conspiracy to undermine the imperial constitution and drown free men’s liberties. How did they know? Their political forefathers had lived through it one before, and written a great deal about it – and those essays survived and circulated widely among the politically engaged colonial elite; and too, the colonies they inhabited took the shape and form they did in no small part due to the actions – and reactions – to James II’s wielding of corporate power.
Based on their understanding of the Stuart example, they thought the leviathan’s bulk was necessarily nourished by blood flowing through corporate veins.
Thus, the legacy of the Royal African Company, and the importance of its corrupt echo in the corporate structure of U.S. Steel lies not only in the personal despotism these companies actively embodied or embody. It rests also in the liberatory ideology that tyranny inspired, as an instrument that detects corruption in the body politic as the rot sets in, identifies it as a danger to free people, and provides the means – the words and the actions – through which it can be opposed, and destroyed.
The best way to survive a cancer is to catch it early, and treat it. U.S. Steel’s new charter shows up as a large malignant mass on America’s scan; will we be willing to cut the tumor out before its too late?
[3] For the 1660, 1662, and 1672 charters of these corporate entities that became the Royal African Company, see Cecil T. Carr, Select Charters of Trading Companies, A.D. 1530-1707, Publications of the Selden Society (London: B. Quaritch, 1913), pp. 172, 177, and 186 et seq.
[4] The source of “sovereign” authority was disputed, however. In theory, in the US today “the People” constitute “the state,” which creates corporations (state and federal). In seventeenth century England, however, the Crown asserted that authority, through the sovereign body of the monarch – though, at various moments Parliament also claimed that authority too, leading to some rather nasty civil conflicts, coups, counter-coups, and counter-counter coups, that were only resolved once the Dutch got involved – a messy outcome.
[5] The RAC shipped some 150,000 people during its primary years of activity, from 1672 to the 1720s. William A. Pettigrew, Freedom’s Debt: The Royal African Company and the Politics of the Atlantic Slave Trade, 1672-1752 (Chapel Hill, NC: The University of North Carolina Press, 2013), p.11.
However, British slave trading would soar to all-time world-historical highs only after the RAC’s monopoly was broken. Independent British slave traders then far surpasses – in a shorter amount of time – the human trafficking of every other slave-trading Atlantic nation. The end of the RAC’s monopoly was a development that planters in North America welcomed, by the way, as now they had cheaper sources for slaves. Another example of the magic of the free market, a blood-soaked sort of necromancy.
The rationale for this rash action is fear: fear that if Delaware does not extinguish judicial independence to better fit Musk’s perverse desires, Delaware will lose critical revenues, as Musk leads corporations to “DExit,” or registering in other states, because of Chancery Court decisions that since 2022 have supposedly upset the balance of power between shareholders and corporate managers.
The data does not support the panicked narrative that SB 21’s supporters have been promoting, however. That narrative seems to be a product of Musk, and his paid agents, spreading misinformation like a miasma across the state.
Delaware’s Corporate Franchise is a Volume Business
Delaware benefits in several ways from having outside corporations registered here. The most valuable benefit is revenues from the “corporate franchise tax.” This is a fee that corporations headquartered outside the state provide Delaware for the “privilege of being incorporated in Delaware.” (Fiscal Notebook, 2024 ed, p. 108). In recent years, the corporate franchise tax, alone, has provided ~20% of total state revenues, or about 1.2 billion dollars. (Personal income tax, paid by human people, provides 33% of the total state revenue). (Fiscal Notebook, 2024 Ed, p. 32).
The critical thing to know about the corporate franchise tax is that it is not an income tax: it’s a set of tiered fees, assessed based on a corporation’s total number of authorized shares – but with a max payment cap of $250,000.
In other words, Delaware is in a volume business, not a value business. Delaware has – or rather, should have – an interest in appealing to the largest number of corporate registrants, not the wealthiest billionaires. That’s a critical point, because the interests of most corporations – and most investors – do not align much at all with the desires of oligarchs like Elon Musk. If it wants revenue, Delaware shouldn’t be catering to the tiny cohort of vampires.
Back to Delaware politicians’ panic: you would think if the corporate franchise tax revenue is indeed in peril – if the “DExit” movement is real, and not just a propaganda hallucination – then there would be some data to support that claim.
Alas for Musk et al., and their well-paid agents, three data points suggest the opposite is true.
1) Startups Continue to Choose Delaware
Peter Walker, “head of insight” at Silicon Valley data infrastructure firm Carta, recently shared a chart from his company’s private dataset demonstrating that 90% of startup C-Corps are domiciled in Delaware – a percentage that has “barely shifted in the last 5 years.” Including in 2024.
2) The Number of Corporations Filing Franchise Taxes Keeps Going Up
The most recent public figures show that 309,911 firms filed franchise tax payments in FY 2024 – an increase that continues the unbroken upward trend of the last decade, before the recent Chancery Court decisions, and then through and beyond them.
Now, total corporate franchise tax receipts have dipped, somewhat, from 2023 to 2024. But they have done so following the same patterns as the Corporate Income Tax.
Source: “Tax Receipts: Corporate Franchise Tax,” and “Tax Receipts: Corporate Income Tax,” in Fiscal Notebook FY 2024 ed., pp. 109, 115
That suggests to me that the cause lies in macroeconomic conditions – unemployment, inflation – rather than anything to do with Delaware’s legal regime. (Corporations paying income tax here do business here; they can’t exit as easily as paper registrants, and have less incentive to do so).
Since 1977, Delaware’s state government has relied on the Delaware Economic & Financial Advisory Council, or DEFAC, for economic forecasts. DEFAC meets quarterly to assess data, and issue guidance – guidance that the General Assembly usually regards as binding on legislation.
At the December meeting, DEFAC forecasts steady franchise revenues for FY 2025, 2026, and 2027. That is consistent with economic indicators – at least, prior to Musk’s installation as co-president – and suggests this expert body saw no threat in the data of the sort SB 21’s draftees were already hallucinating.
Musk’s Pungent Miasma is Not Reality
In short, private and public data sources agree: there is no observable decline in incorporations in Delaware, and no evidence that “DExit” is occurring in response to Chancery Court rulings. Further, the advisors specifically tasked with forecasting future franchise tax revenues – that is, a body of people mostly not employed by Elon Musk – do not see evidence for dramatic change.
An alternate explanation does fit the data better, though. Elon Musk’s lawyers drafted SB 21 to benefit their oligarchic clients, not Delaware. Musk’s paid agents are breathing the bad vibe fumes they want to see in the world into existence. The odor of panic they’ve wafted into lawmaker’s nostrils is thus a miasma, in the classic sense: unhealhy and unpleasant air, produced as the unpleasant exhalation of rot and corruption, that causes feverish illness.
Delaware’s leaders should not radically revise our laws, and gut a valuable franchise, on the basis of huffing Musk’s swamp gas.
Note: while by statute, the heads of Delaware’s state agencies are supposed to provide public reports on things like the total number of corporations registered here, and revenues derived from them, in practice Delaware state government is … uninterested in transparency. Opacity is part of the value Delaware provides, apparently.
The upshot is that basic data, and foundational statistics, are often hard to get, and difficult to parse using normal methods even when located. Still, while our state government officials are intentionally(?) incompetent at communicating to the public, they have not shirked their duties completely; there are sources worth your time & examination.
While this report is not linked on the DE Finance Department’s page, you can find it at that URL. An annual report, it offers a wealth of up-to-date statistics on the fiscal situation of the government of Delaware, including revenues and expenditures, as well as detailed supplemental information on specific taxes, fees, pension contributions, bond obligations, and subsidiary agencies.
The fiscal notebook is a rehashing of much of what is in the ACFR, but summarized and more richly contextualized look at the state budget, with historical data and legislative histories. If you want to know when the corporate income tax changed, and under what legislation, the Fiscal Notebook is your guide. It has some charmingly 1990s graphic design, as well. Prior reports are available here.
DEFAC posts cryptic briefing books and terse meeting minutes, grouped by date, on this page. If you dig far enough, you can find their predictions; and if you want a bit of fun, take a look at how far off they were in their predictions (usually they underestimate revenues by quite a bit, and overestimate the cost of expenditures; there appears to be a spirally structural austerity built into their models, assuming any models actually exist beyond intuition).
In theory, under the law, this page should contain the division’s up-to-date annual reports, detailing numbers of business entities registered in Delaware, and other pertinent information. In practice, this website is a wasteland.
Much like the recent revisions to state law themselves, these reactions to mild criticism are expressions of myopia. Criticism of the sort SB 313 attracted in 2024 – that it proceeded anti-democratically, that it harmed ordinary people, that it was motivated by a small set of special interests’, and would lead to abuse – were leveled at Delaware state legislators when the state’s corporate law first passed in 1899.
If anything, earlier observers of Delaware corporate law in the Gilded Age were far more blunt in their criticism than anyone in the 21st century has ever thought about being. To illustrate, lend your eyes to this brief article from the American Law Review, a legal journal based in St. Louis: “Little Delaware Makes a Bid for the Organization of Trusts,” American Law Review 33, no. 3 (May-June 1899): 418–24.
Well-known to Delaware lawyers – and recently, at least one historian – the article takes the form of an unsigned “note,” one of a few dozen that appeared at the back section of every journal issue, after the treatises and articles, but before the listings of recent major court decisions. My assumption is that it is either written by the editors, Seymour D. Thomson and Leonard A. Jones, or one of their close associates – and either way expresses their editorial views.
And my goodness, are the Am.L. Rev. editors unimpressed with Delaware trying to copy New Jersey’s loose corporate charter rules, much less their attempt to “improve” on them by giving corporations even more expansive powers. After some praise for Delaware’s old Democratic (and enslaving) political establishment (and some sharp elbows at the emerging state Republican party), the editors note that the curious feature of US federalism – that state sovereign powers are equal, and that states set corporate law – is what provides the temptation that Delaware has now given into:
“The “sovereign” States of the American Union are equal: equal in the Senate, for little Delaware wields the same voting power there as does great New York. They are also equal in regard of the deviltry they can do – equal in regard of the injury they can inflict upon their sister States. It is as though a Klondike gold mine had been discovered in New Jersey, and all Delaware were on the rush to get there. In other words little Delaware, gangrened with envy at the spectacle of the truck-patchers, sand-duners, clam-diggers and mosquito-wafters of New Jersey getting all the money in the country into her coffers, – is determined to get her little tiny, sweet, round, baby hand into the grab-bag of sweet things before it is too late.” (p. 419)
And, the editors note, this law will be a jobs-employment program for Delaware politicians; they may need to even import labor:
“But with this exception; and herein the little great “State of Delaware” casts its little great anchor to the windward. Although ” any three persons may organize a corporation,” yet ” only one director need be a resident of Delaware.” And this ” one director'” is going to be paid for being a director, and don’t you forget it. If the rush to organize corporations and trusts under this new Delaware law is as great as under the New Jersey law, there will not be politicians enough in Delaware to serve as directors of corporations and trusts for all the other States of the Union, but professional directors will have to migrate to Delaware from other States, and their name will be Legion.” (p.420)
Delaware legislators’ grandiose proclamations about their new law’s global applicability seem to be particularly grating:
” Nor will you be confined, in the conduct of your business, when so happily incorporated, to your drought-smitten and grasshopper-eaten prairies. “It,” – that is to say you when you have turned yourselves into Delaware corporations – ” may conduct business anywhere in the world.” Certainly you may. Why not? The great State of Delaware says so, and is not that enough?” (p. 421)
Halfway through, the editors re-frame their note as addressing the great political enemies of the Big Corporations in this particular moment – the hardworking, Populist Party-supporting farmers of Kansas. (This is for rhetorical effect; I doubt too many populists were reading this attorney-specialty journal). And in this section, the editors suggest that should these farmers try to use the state power they control, they’ll face a potent force – in law, if not actually in the military.
“If Kansas attempts, through its legislation, to interfere with the sovereign prerogatives of Delaware, Delaware will be there with its oyster-boat and clam-boat navy, and with its unterrified militia; and what then will Kansas do about it?” (p.423)
And then finally, they note the alchemical aspects of Delaware’s new law.
“Let us not forget, oh, toiling brothers of the Kansas deserts, one other feature of this congenial law: 6. “The liability of the stockholder is absolutely limited when the stock has once been issued for cash, property or services.” Brother, do you need to photograph this sentence by means of an X-ray? Can you not see through it? Is it not pellucid ? It says, ” issued for cash.” It does not say paid for in cash. Is it not ” issued for cash” when it is issued for the promise of cash? and is it not issued for property or services when it is issued for the promise of such commodities? And if the gold bugs, bond- holders and other octopi, should render it hard to redeem your promise to pay for your shares – even in chips and whetstones, – why should you so pay? You have launched your corporation; the sovereign laws of Delaware allow you to commence business before any “sum whatever was paid in; ” and who or what is going to stop you from continuing your business? Do you not see that here is a scheme to turn the world into a sudden millennium? And if you object that a millennium must consist of a thousand years and cannot be created in a day, the answer is that all things are possible with the sovereign State of Delaware. What were the dreams of the ancient alchemists to this? They at most could, by processes somewhat tedious and expensive, convert gross metal into gold. But, without any gross metal of any kind to work upon, not even silver at the ratio of 16 to 1, the sovereign State of Delaware stretches forth her wand over the prairies of Kansas and calls upon money to come, and it comes.” (p.424)
What the irritated attorneys have described here is the central magic of finance, generally, and corporate finance, in particular. With some law and a bit of market faith – and a willingness to grift – you can conjure something out of nothing, and profit. Devolving sovereign power onto private parties who derive artificial persons, and then mortgage those “persons’ ” future cash flows for current income to actually do something (well, sometimes) – That’s Capitalism, Baby! If it feels like fraud, well, you probably don’t sit on the right corporate boards.
This is all to say that criticism of those would weave this kind of spell – and of Delaware legislators’ meddling in its magics, specifically – is nothing new in 2024. The First State’s legislators been catching heat for playing sorcerer’s apprentice, and carrying water for outside financial interests, for a very long time. Maybe they should get used to it? (Or, I dunno, change their ways?)
Or, An Investigation Into Just How Deep Delaware’s Commitment to the Bit Goes
Corporate Voters Project – Research Note #1
In Delaware, corporations can vote. So can LLCs, partnerships, and trusts, provided they own real property within the municipality where the election is taking place. In “The Company State,” capital not only has a voice – it has the franchise.
So just as I became a new, working citizen of Delaware, I discovered that my rights paled next to the those enjoyed by old, rentier capital.
Though the election raised many questions – as well as my blood pressure – in the busy season of a new semester on an unfamiliar campus, I let it lie as an oddity. In the wake of that bond election, there was enough concern expressed by other locals that the City Council petitioned the state legislature to revise its charter, to limit the franchise to human residents and human non-resident property owners “in accordance with the principle of ‘one person, one vote.’” The charter was successfully amended in 2019. [1]
But “dead labour” in the form of company capital, wasn’t done enlivening Delaware’s politics. In late spring 2023, news broke that the leaders of Seaford, DE had got a charter revision bill of their own introduced. It was the mirror image of Newark’s reform. Seaford wanted to empower a property owner, “whether a natural person or an artificial entity,” to vote in all town elections. (It seems the unpopular town council in Seaford was eager to substitute property for people, as voters). Delaware Republicans, eager to claim fifteen minutes of public infamy for supporting corporations’ right to stuff the ballot, used parliamentary tactics to bring the legislature to a screeching halt until the bill passed in the House. It did – though the measure was later quietly smothered in a Senate committee, and never became law. [2]
Needled twice by the news, my interest – and my ire – was piqued. And if that’s not a reason for research, what is?
~*~
If there was anywhere in the United States you might expect to find a corporation voting, Delaware is it. A state that only recently reached the milestone of one million human residents, the self-proclaimed “Corporate Capital of the World” is home to over two million business entities, including two-thirds of the Fortune 500.
Corporations and LLCs don’t come here for the beaches, though. They sink shallow roots into our clayey soils because the state government offers a uniquely “business-friendly” regime. In return for filing a simple registration form and paying some light taxes and fees, DE state officials ask few questions, and impose fewer regulations. When conflicts between companies arise, as they tend to in the hurly-burly world of modern business, Delaware’s uniquely commercially-oriented Court of Chancery offers speedy, jury-free resolutions. And if that service fails to satisfy, well, the Delaware legislature is ready to bend to meet the whims of capital with a flexibility an Olympic gymnast would envy.
While intentionally obscured from ordinary residents, “The Franchise,” so-called, is well understood by CEOs and corporate lawyers, as well as the state’s politicians and their lobbyist handlers. For multinational conglomerates, secretive shell companies, and mom & pop landlords alike, Delaware offers the best deal within U.S. territory for running your business cheaply, opaquely, and just “legally” enough.
This frictionless pliability pays for Delaware’s government. In fiscal year 2023, for example, the various fees and taxes levied on nominally Delaware-domiciled corporations and business entities provided $2.9 billion in revenue – a fairly typical 46.4% of total state collections. Whether clued in or not, all Delawareans are complicit in these arrangements. Their tax burden is low, yet their roads remain well-paved – because the First State has decided to use its sovereign power to charge a light toll in return for displacing the true costs of unchecked capitalism onto the rest of the nation, and the world. [3]
It’s a little gift, from our little state.
~*~
Still, even in Delaware, the idea that a corporation can vote gives people pause. It sure as heck arrested my attention, and puzzled me. So as the furor of the 2023 Seaford bill died down, and with my new hometown’s recent bond vote in mind, I’ve spent the last month or so digging into the practice of corporate voting in Delaware.
I’ve tried to keep my questions simple, obvious, and answerable:
How widespread is corporate voting? Does it only happen in Delaware towns, or beyond?
When did the practice take hold – and under what circumstances? Is corporate voting a relic of the state’s Jim Crow past, or a more recent disease of the body politic?
And finally: why? Of all the ways to arbitrarily pervert the democratic process to favor the wealthy, why have Delawareans chosen this method? And how is the local “corporate franchise” connected to “The Franchise” – if it is at all?
My research plan is similarly straightforward. I’ve completed the first step, a close examination of the current charters of all 57 municipalities incorporated in the state of Delaware.
Some early findings:
70% of DE municipalities (40 towns & cities) allow corporations and other “artificial entities” to vote in at least some circumstances, usually referenda on annexation and/or bonds;
Three towns (Dagsboro, Fenwick Island, and Henlopen Acres) allow corporate voting in all circumstances
The local corporate franchise is premised on property ownership: the “entity” must own real property within municipal limits (or proposed municipal limits, for annexations); and generally companies exercise their voting rights through a representative with power of attorney;
Most towns that allow corporate voting limit it using a “one person / one entity” rule – but not all of them do;
There is also a pronounced geography to corporate voting rights in Delaware: it gets more common as you travel south. New Castle County only counts 3 municipalities that allow it; Kent Co. has 16; and Sussex Co., land of beaches, chicken farms, and confederate monuments, has a whopping 21.
Since it quickly became apparent to me reading charters that property ownership is critical to local corporate voting rights, I also tallied how many Delaware towns enfranchise non-resident property owners, and found that:
81% of DE municipalities (46 towns & cities) allow non-resident real property owners to vote in at least some circumstances (again, most commonly annexation and bond elections);
However, fully 23% of them (13 towns & cities) allow non-residents to vote in all elections – and some even allow people who don’t reside within the municipality to govern, as members of the town council!
As with corporate voting, the enfranchisement of non-resident property owners is more common in Sussex (24 towns), than it is in Kent Co. (17 towns), with New Castle coming last in the number of municipalities that allow it (just 5 towns).
Now that I’ve gotten a sense of the current landscape of corporate and property-defined voting, my next task is to dig into the history of a handful of municipalities, using newspapers and legislative archives, to see if I can find out when – and perhaps why – this corporate citizenship first appeared.
I have no doubt but that further unpleasant surprises await; but that’s history, in Delaware.
[2] HS 1 for HB 121: “An Act to Amend the Charter of the City of Seaford Relating to the City’s Ability to Authorize Artificial Entities, Limited Liability Corporations’ Partnerships and Trusts to Vote in Municipal Elections Held in Seaford,” (April 20, 2023), https://legis.delaware.gov/BillDetail?LegislationId=130205.
In my calculation of the revenues generated by “The Franchise,” I include the corporate income tax, the franchise tax, the LLC/LP tax, business entity fees, “unclaimed property” (aka escheatment, aka Delaware skimming off of unused gift cards), and the bank franchise tax.
![Louis Dalrymple, “Uncle Sam’s Dismal Swamp,” Puck, November 15, 1893, https://www.loc.gov/pictures/resource/ppmsca.29155. Print shows Uncle Sam sitting on a log in a swamp labeled "Spoils System" from which snakes labeled "Quayism", "Bardsleyism", and "Tannerism", and noxious fumes rise in the form of shades labeled "Raumism - Pension Swindler, Crokerism, McLaughlinism, Tweedism, Prendergast - Political Assassin, [and] Guiteau - Political Assassin". Also shown among the tree roots is Charles A. Dana.](https://daelnorwood.com/wp-content/uploads/2025/02/dismalswampcrop.png?w=839)
Dael A. Norwood 
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