About Private Prisons

If we’re going to talk about people profiting off of prisoners, we have to start with the convict leasing system of the mid-19th century United States:

“In the nineteenth century, Texas leased its penitentiary (which survives today as the Huntsville “Walls” unit) to private contractors. For a few dollars per month per convict, the contractors were allowed to sublease their charges to farmers, tanners, and other businessmen. It was not long before the inmates began to appear in poor clothing and without shoes. Worked mercilessly, most convicts died within seven years of their incarceration. Escapes and escape attempts were frequent. Conditions were so horrid that some inmates were driven to suicide while other maimed themselves to get out of work or as a pathetic form of protest.”

- John DiIulio, Jr. The Duty to Govern 1990

Eventually, the conditions and corruption became such a scandal that the Texas Legislature was forced to intervene, and it abolished the contract-lease system in the early 20th century.

New experiments with prisons for profit began in the 1980s, fueled in part by conservative activists and politicians intent on shrinking the scope of government (since prisons were a core government function) while beating back the power of public employee unions. Strangely, these motivations appeared to dovetail with a separate, highly urgent set of issues: the struggle in many states to meet court mandates to relieve horrible prison overcrowding and remedy unconstitutional conditions in decrepit prison facilities. Something had to change, and some businessmen saw this crisis as an opportunity to profit by building and operating prisons.

Texas became the first state with one of the new wave of private prisons, when Corrections Corporation of American (CCA) opened a for-profit immigrant detention center in Houston in May, 1984. Another CCA for-profit detention center followed in Laredo the following year, and private prisons spread like wildfire across Texas. By 1997, eleven different states were housing more than 5,000 prisoners in 22 private prisons in the state. These prisons generated $1 million per week in revenues for the companies that operated them. The companies collected profits while many states collected reports of abuse, poorly trained staff, poor conditions, escapes and scandals.

Perhaps the many problems with prisons-for-profit help to explain a steep decline in the profitability of private prison companies at the turn of the century. By 2000 the fortunes of many private prison companies went into a steep decline. Corrections Corporation of America, for example, the giant of the private prison industry, saw its stock tumble down from an all-time high of over $84 per share to less than 25 cents a share in December of 2000. Wackenhut, the second largest private prison corporation, reported increasing revenues in 2000, but its stock earnings were still declining, and the closing of the infamously mismanaged Jena youth prison cost the company over $2 million.

Texas' private prisons might have run themselves out of business if not for the events of September 11, 2001. The new wave of fear prompted a fresh demand for prisons to hold immigrants prior to deportation. Texas found itself back in the center of a private-prison gold rush. In the last five years, numerous new private prisons have been sited in Texas, some built in as few as 90 days. Now Texas is entering a new cycle of abuse, escapes, and mismanagement.

Remarkably, as of 2007, Texas still welcomes private prisons with open arms. Although at some point, private prisons will again be a part of our infamous past, they are very much part of current events. Check out the main page of Texas Prison Bid’ness to see the latest news about the private prison industry in Texas.