The 1851 Indiana constitution truly stands out as a pivotal moment in American legal and political history, pioneering a significant shift in how state legislatures conducted business. This landmark change was a direct response to a pervasive problem of legislative favoritism and corruption that characterized the early 19th century.
Prior to this period, much of the legislative activity at the state level involved the enactment of “private bills,” which were essentially laws designed to benefit specific individuals, groups, or localities. This could include anything from granting a pension or a divorce to relieving debts or, notably, forming a corporation through a special legislative act. Such practices were widely perceived as inherently corrupt, even if no direct bribery took place. This perception fueled a “political revolt” during the antebellum period.
The Indiana Constitution of 1851 took a bold step to address this issue. It pioneered in forbidding the state legislature from enacting many types of private or local bills. Specifically, it declared that corporations “shall not be created by special act, but may be formed under general laws”. Beyond corporate charters, it also prohibited special and local legislation in numerous other areas, such as:
- The punishment of crimes and misdemeanors.
- Changes of venue in civil and criminal cases.
- The granting of divorces.
- Changes of persons’ names.
- The construction of highways.
- The assessment and collection of taxes.
- The sale of real estate belonging to minors or others with legal disabilities by executors, administrators, guardians, or trustees.
Crucially, the Indiana constitution mandated that laws had to be general. It stipulated: “In all the cases enumerated in the preceding section, and in all other cases where a general law can be made applicable, all laws shall be general and of uniform operation throughout the State”. This move was considered a “radical departure” from the old regime of inherited legal privileges and inescapable dependency, pushing towards a systematization of law where rules applied equally to everyone. It was seen as a “political problem” solution, aiming to dismantle systemic corruption rather than just individual acts of venality.
Indiana’s foresight had a profound impact: almost all state governments followed Indiana’s lead in the second half of the 19th century, revising their own constitutions accordingly. This fundamentally changed the norms of how governments were expected to operate. It led to the “widespread adoption of general incorporation acts in the 1840s” and beyond, which “liberalized access to corporate charters”. This reform meant that obtaining a corporate charter no longer required a special act of the legislature, instead allowing for unlimited entry into corporate status via an administrative procedure. This also gave rise to “free banking” in some states, like Michigan and New York, in the late 1830s.
However, this liberalization of access was accompanied by “more severe restrictions on the structure of corporations”. Corporations formed under these general acts shared common features, and in states that banned special incorporation, a corporation’s internal voting rules, shareholder rights, or management structure were constrained. This set of constitutional reforms was explicitly designed to “cut away the roots of systematic corruption” by limiting the government’s ability to create “economic rents” through restricting entry and granting special privileges.
This development occurred in a broader context of states grappling with financial challenges, particularly after the “internal improvement boom collapsed after 1839,” leading them to re-examine the policies that had resulted in significant state debt.
It is important to note, however, that while this Indiana constitution aimed to promote a more universal application of law, it also contained provisions that would now be considered deeply discriminatory. For example, it took away the right to vote from “Negros and Mulattos” and even barred them from moving into the state. This highlights the complex and often contradictory nature of constitutional changes in American history, where advancements in some areas coexisted with severe injustices in others. While the federal government did not adopt similar prohibitions against private bills, the state-level constitutional revisions profoundly changed norms about appropriate legislative behavior.