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Rob Natelson: The Misplaced “Philosophy” of I-166

    In the 2012 elections, Montanans overwhelmingly approved I-166—a measure that has no substantive effect, but expresses the “philosophy” (the word used in I-166) that corporations have no First Amendment rights.

When you read I-166 carefully, you have to wonder what the voters were thinking when they passed it. In case your own thoughts on the subject are fuzzy, here are some cool, clarifying fresh breezes:

1.     Corporations are not alien cyborgs from the planet Bloton. They are merely teams of people working for a common purpose.

Some are big and rich, but most (especially in Montana) are small and relatively poor.

People incorporate because the state pushes them to.  The state offers them the right to (1) use the corporation’s name in lawsuits rather than listing all the owners individually and (2) dispense with clumsy liability disclaimers to protect owners’ and members’ personal assets. (Corporate assets are still vulnerable.) But the team choosing incorporation has to pay extra taxes, extra fees, disclose a lot of private information, and abide by numerous state rules.

2.     The “philosophy” of I-166 would destroy freedom of the press.

Because of how state law is structured, nearly all media companies are forced to incorporate. If groups choosing the corporate form have no constitutional rights, then they have no freedom of the press. Some of the greatest victories for freedom of the press were won only because media corporations could defend their rights in court (for example, the Pentagon Papers case).

So if your “philosophy” is that the politicians should be able to bully all the newspapers and broadcasters into silence, then I-166 is for you!

3.     The “philosophy” of I-166 would heavily impair freedom of speech.

State law effectively pushes political associations to incorporate. If the “philosophy” of I-166 were to prevail, those associations would have no free speech rights.

In the 1950s, racist state officials in the South tried to crush pro-civil rights membership corporations like the National Association for the Advancement of Colored People (NAACP).  Those state officials didn’t think corporations had First Amendment rights, either. Fortunately, the Supreme Court disagreed. (NAACP  v. Alabama).

4.    I-166 has nothing to do with “leveling the playing field.”

I-166 says it seeks a “level playing field in campaign spending.” But does it?

The “philosophy” of I-166 restricts corporate spending, but not union spending. Even worse, it says nothing about controlling government political spending, such as lobbying and other government interventions in the political system. Government political spending is a MUCH bigger problem than corporate spending, because government political expenditures are bigger, largely hidden, and financed with money forced from people.

5.    Campaign finance laws are counter-productive.

In the real world, government campaign laws always are politically manipulated, but still yield unintended results. As I pointed out last week, the 1912 Montana initiative that abolished corporate spending may have INCREASED the power of the Anaconda Company over Montana politics.

Montanans need to reconsider what they did when they approved I-166. And make sure that they are more wary in the future.

Rob Natelson: MT Supreme Court’s “History” in Campaign Finance Case Was Really Bad

The Montana Supreme Court won praise for its use of history in the corporate finance case, Western Tradition Partnership v. Attorney General, a decision subsequently reversed by the U.S. Supreme Court.

But the Montana court’s “history” was weak, to say the least. One writer called it “junk history” here.

Last year, I did an extensive library fact-check of the Montana court’s claims. I summarized some (although not all) of my conclusions in a published paper.

Here’s a quick summary of my principal findings:

First, while claiming that corporate campaign corruption was once widespread in Montana, the justices cited only two events, both over 100 years old. Both were irrelevant to the claim that Montana has a “unique” history of corporate electoral corruption. One was the alleged bribery of a pair of district court judges, which had absolutely nothing to do with campaigns or elections. The incident was never proved, and it’s not even clear that corporate money was involved.

The other was a candidate’s bribery of state legislators in a 1899 U.S. Senate election. The U.S. Senate committee report on the incident described only bribery by individuals, not by corporations. The episode did not involve independent expenditures and was not unique to Montana, since similar episodes throughout the country soon led to adoption of the Seventeenth Amendment.

Second: The Montana Supreme Court failed to cite a single dispassionate historian for its conclusions. In investigating the backgrounds of the writers it did cite, I found that all but one were personally involved in state government as employees, politicians, family members of politicians, political activists, lobbyists, or several of the above. All of those had personal interests in the subject and apparent reasons to dislike the perceived conservatism of business corporations. All wrote either from either a “progressive” or (in one case, from a socialist) point of view. The one writer who had not been involved personally was a “progressive” journalist, not a historian, and had no pretense of objectivity.

Third: The court relied on books that failed to follow normal historical practice in citing sources. Their footnotes ranged from few to almost non-existent. The writer relied on most heavily was K. Ross Toole, whose relevant chapters were largely based (often word-for-word) on his Ph.D. thesis. That Ph.D. thesis was essentially a youthful assault on the Anaconda Company—a company Toole was convinced was an institution of conservative evil.

I compared the relevant footnotes in Toole’s thesis with the actual newspaper articles he cited. I found that nearly two thirds of Toole’s notes were defective. The articles he cited often did not support the claims in the text.

Fourth: The Montana Supreme Court claimed that after the Copper Wars at the turn of the last century the Anaconda Company absolutely dominated the state. But the court’s own sources are contradictory on that point. For example, one of those sources (a book by Malone & Roeder) claims absolute Anaconda domination on one page and then celebrates numerous state “progressive” victories over Anaconda a few pages later. The book never explains how the “progressives” could have been so successful if Anaconda had such a lock on the state.

(A more balanced view is that while Anaconda influence was considerable in Montana for much of the 20th century, Anaconda lost many battles as well, as the election returns demonstrate.)

Finally: In upholding the state law censoring corporate speech, the Montana Supreme Court claimed that the law was enacted to end “This naked corporate manipulation of the very government. . .” But there is no way the court could have known this. The books it cited provided little information on the law or its reasons for passage. According to contemporaneous newspaper articles, the text as passed (possibly now lost) was quite different from the version at issue in the case. The court cited no campaign materials, and the newspaper reports (which the court didn’t cite either) are uninformative on the reasons for the measure.

The actual effect of the law may have been to increase Anaconda Company influence, since it curbed the campaigning of other corporations while leaving Anaconda-owned newspapers exempt.

It appears, in other words, that the Montana Supreme Court was guilty of what professional historians contemptuously call “law office legal history”— the selective use of isolated and questionable “facts” to promote a case.

Law-office history can make good reading, but never confuse it with real history.


Rob Natelson
* Senior Fellow in Constitutional Jurisprudence,
Independence Institute & Montana Policy Institute
* Professor of Law (ret.), The University of Montana
* biography & bibliography: http://constitution.i2i.org/about/