 Our first speaker this morning is Robert Higgs, who is currently the William E. Simon Professor of Political Economy in the Department of Economics and Business at Lafayette College. That he has graduated with distinction from Johns Hopkins University, is a former professor of economics at my old alma mater at the University of Washington, and I'm going to keep the introduction short in order to maximize Bob's time. Come on, Bob. Thank you, Jim. Consider a fact, an obvious fact, but still a fact. Social conditions are not always normal. From time to time national emergencies occur. They always have, and I imagine they always will. Given that fact, it's of some importance to consider the question, can the Constitution protect private rights during national emergencies? The answer is no. The historical record is quite clear, and in regard to this question, there's no reason to suppose that the future will differ from the past. The outlook, therefore, can only dishearten those who believe that the fundamental purpose of the Constitution is to protect private rights to life, liberty, and property. Founders of the United States established the Constitution, as they said, to secure the blessings of liberty to themselves and their posterity. But time and chance have been unkind to their hopes. They intended their framework of freedom and government to endure through the ages, through storm as well as sunshine. But the dead could not forever bind the living, and the unfolding of our history during the 20th century has brought into being a second Constitution. Besides the normal Constitution, protective of private rights, and we now have a crisis Constitution, hostile to private rights and friendly to the unchecked power of governmental officials. In national emergencies, the crisis Constitution overrides the normal Constitution. The great danger, it seems to me, is that in an age of permanent emergency, which is, after all, the age we live in and the age we are likely to go on living in, the crisis Constitution will simply swallow up the normal Constitution, depriving us at all times of the very rights the original Constitution was created to protect at all times. To present evidence in support of this argument, I provide in the paper a survey, a very brief survey of some of the outstanding events and Supreme Court cases that I think warrant the conclusion I've reached. What I provide is a sample, not a random sample. In fact, it's selected to contain some of the outstanding events and cases. But I would add that it's by no means the whole body of evidence in support of my thesis. There are thousands, I would say, of additional pieces of evidence that might be brought to bear. And some of the sources given in the paper allow you to pursue additional evidence should you wish. I start with the railroad labor troubles of 1916, 1917. In that case, the operating brotherhoods in the railroad industry threatened a nationwide strike. And President Woodrow Wilson, very anxious to prevent such a potentially catastrophic event, induced the Congress of the United States to pass the Adamson Act, the effect of which was simply to impose upon the employers and the employees in the industry a 25% increase in wage rates. The employers challenged the constitutionality of the Adamson Act, and the Supreme Court ruled in the case of Wilson versus knew that the action was constitutional. In that case, the court had to confront whether emergency powers existed. It certainly appeared that the Adamson Act was the exercise of an emergency power. But the court ruled that while the government had no emergency power as such, it did have a reservoir of reserved power upon which it might legitimately draw during emergencies. It was a nice distinction, not one that everyone appreciated, including the dissenters in that case. Shortly thereafter, after the declaration of war, conscription of soldiers was provided for. That too was challenged. Never before had the Supreme Court ruled on the constitutionality of the national draft. And in the draft law cases, the court was unanimous. And in the words of Chief Justice Edward White, the reasoning was that the very conception of a just government and its duty to the citizen includes the reciprocal obligation of the citizen to render military service in case of need, and the right to compel it. During the Great Depression, emergency actions were taken at all levels of government. In particular, during 1932, 1933, 34, 25 states enacted legislation providing for moratoria on mortgage foreclosures. This action was challenged in a case originating in Minnesota, came before the Supreme Court, in the case home building and loan association versus Blaisdell. In a narrow decision, the court upheld the actions of Minnesota. And I might add that in arguing before the court, counsel for the state of Minnesota had been quite open in admitting that the moratorium would normally have been unconstitutional as an impairment of the obligation of contract. But Minnesota argued that these were not normal times, and so Minnesota should not be bound by the usual constitutional restrictions. Majority of the court agreed, as Chief Justice Charles Evans Hughes says, the contract clauses protection of private rights, quote, is not to be read with literal exactness. Also in the Great Depression, federal government abandoned the gold standard, nationalized the monetary gold stock, and abrogated the gold clauses of all contracts, public and private, past and future. This was an extremely consequential act, in various respects. The age of inflation that we've suffered virtually ever since is not unconnected with it. It was, of course, challenged, but the actions of the government were upheld, and again in the words of Hughes, contracts, however expressed, cannot feather the constitutional authority of the Congress. In the war emergency of World War II, the federal government suspended a great variety of private rights, as Clinton Rosseter once said of all the time-honored Anglo-Saxon liberties, the freedom of contract took the worst beating. Again, men were conscripted for war, some 10 million. Japanese Americans, whether U.S. citizens or not, were herded into concentration camps without due process. Plants were allocated by government order, production facilities were seized and operated by the government, many consumer goods were rationed, and extensive price and rent controls were imposed, implemented by the Office of Price Administration. For the most part, the government's actions in depriving citizens of rights during the war were not even challenged, or if they were challenged, they never reached the Supreme Court. The Supreme Court did consider challenges to the price and rent controls, but the court found no reason to deny the government any of the many powers it was exercising at the expense of private rights. In the words of Justice Wiley Rutledge, citizens must surrender or forego exercising rights which in other times could not be impaired. That, I think, is a very clear expression of an emergency powers doctrine. Not everyone has recognized it as such. During the Korean War emergency, the government reinstituted many controls. The wage price controls in particular created a collective bargaining impasse in the steel industry, and again threatened a nationwide strike. President Truman, in order to prevent that strike, ordered the Secretary of Commerce to seize most of the steel mills in the country. The owners of the properties challenged the action, and the Supreme Court ruled on the constitutionality of it in Youngstown's sheet and tube versus Sawyer. The court in that case denied the President the right to seize the industry, and some people read this as a turning point, as an instance in which emergency powers were denied. I think it's a mistake to look at it that way. The case was certainly in no way a triumph of private rights, nor was it a significant check on the exercise of the government's emergency powers. The episode actually involved a power struggle between the President and the Congress. On emergency powers as such, the court actually spoke more in favor than in opposition. The ruling specifically was that the President had no authority to seize the steel mills without specific legislative authorization by the Congress, but no one denied that Congress might well have made such an authorization. In the 1970s, after the Watergate troubles, Congress attempted to recover some of its lost authority and passed the National Emergencies Act in 1976 and the International Emergency Economic Powers Act in 1977. These acts placed new procedural requirements on the exercise of emergency powers by the President, but they did little to detract from the substance of such powers. I don't think a great many people appreciate the extent to which declarations of emergency continue to be made and powers continue to be exercised under these declarations. Under emergency decrees, American citizens recently, and I mean within the last decade, have been forbidden to engage in a variety of travel, commercial, and financial transactions with the citizens or governments of designated countries, including Cuba, Iran, Libya, Syria, South Africa, and Nicaragua. Recent Supreme Court rulings have sustained a wide scope for the exercise of presidential emergency powers. In particular, the legislative veto case, INS versus Chata, effectively demolished the check of a concurrent resolution that had been provided in the National Emergencies Act as a device to allow Congress to overturn the exercise of emergency powers by the President. In 1981, the case of Dames and Moore versus Reagan, the court gave broad construction to the President's power to act under the International Emergency Economic Powers Act, and it went further to say that the President, even when he lacked statutory authority to take emergency action suspending private rights, nonetheless had constitutional authority to, for example, terminate the claims that American citizens had brought against Iran in federal courts. An even more recent case, Reagan versus Walled, 1984, the court allowed an imposition of emergency controls on travel to Cuba without a declaration of national emergency and without even compliance with the procedural requirements of the National Emergencies Act. The outcome of all these recent actions is that during the past decade, American citizens have been forbidden to travel to various countries, to borrow or buy from, lend or sell to the citizens or governments of various countries, to fulfill the terms of valid contracts, to pursue in US courts legal remedies for injuries and takings. In other words, far from having their rights to life, liberty and property upheld by the federal government, Americans have been routinely deprived of such rights under declarations of emergency. In attempting to understand why the crisis constitution has arisen and how it operates, I think it's important to look at what I call three loci of the Constitution. There's been some discussion in the conference previously about the distinction between the constitutional document and the so-called living constitution. Most of what's been said seems to have to do with whether there ought to be a living constitution or not. I'm not concerned with whether there should be, but I make a distinction between three places that you might find the Constitution. One, of course, is the constitutional document, and if you look in that for emergency powers, you won't find them. There's no mention of emergency powers in the document. If the framers intended the government to exercise any different powers or to protect any different rights during national emergencies, they certainly neglected to mention that. Of course, another notion of the Constitution is what Charles Evans Hughes said in a famous statement that the Constitution is what the judges say it is. As I say, constitutional law tells us what the Constitution means. I think that's inevitable. It's not a question of whether you want judges to interpret the Constitution or not. There isn't any choice. The Constitution has always been making law from the very beginning, and I frankly am a little puzzled by people who find that somehow in the 1960s the court suddenly became a lawmaking branch. It seems to me that the court has always been a lawmaking branch. The court has, however, been reluctant to pronounce a clear national emergency doctrine, even in cases like Wilson v. New and Blaisdell. The court took this curious position that there are no emergency powers as such. It's just that there are these reserved powers that may be called into play during national emergencies. It seems to me that in constitutional matters, as in others, actions speak louder than words. A third place that you might look for the Constitution is neither in the document nor in the U.S. Supreme Court reports, but around you. Ever since at least the time of Aristotle, there's been a notion of the Constitution that boils down to the Constitution is how governments act. It's how the polity operates. And I think this is a very important sense of what the Constitution is. I call this the constitutional system. It consists of the conglomerate of beliefs, behaviors, and institutions that actually determine the structure of governmental powers and private rights, and the processes whereby these powers and rights are altered. Clearly, the crisis Constitution is and has for a long time been an integral part of the American constitutional system. If you're going to make bets, you'd better bet that in the next national emergency, the federal government will extend its powers at the expense of private rights to life, liberty, and property. Well, let's think for a little bit about why the crisis Constitution has evolved, why in each episode the government has tended to suppress private rights. In the paper, I go through the same examples I gave a few minutes ago, and I ask in each case, might the outcome have been different? Can we imagine, for example, that the Supreme Court would have ruled differently? Now, of course, we can imagine that in human action, nothing is totally determined. But my argument is that when we consider the political realities and the prevailing crisis conditions in each of these episodes, it's extremely unlikely that the court would have ruled differently than it did. Consider, for example, the Court's ruling on the Adamson Act, 1917. How did the court think about the consequences of ruling one way or another? Suppose the Adamson Act had been struck down. What would have happened? Well, everyone expected that there would be a nationwide railroad strike, and everyone expected that this would have disastrous consequences. The United States in 1917 was extremely dependent on the railroad transportation system. But that was not the end of it, by any means. The United States stood on the brink of war as the court was deciding Wilson v. New. And as Thomas Gregory, who was Attorney General at that time later said, Chief Justice White, quote, knew, as we all knew, that we were on the very verge of war. For the moment, he forgot the facts of the case that was before him. And his prophetic eye was resting on the immediate future, when every proper energy of our country would be called upon to sustain it in its hour of greatest need. Seems to me that the majority simply was not willing to issue a ruling fraught with danger to the military strength of the nation, no matter what the normal constitution might require. In the case of the draft law rulings, the decision was unanimous, but under the prevailing political and social conditions, this was almost inevitable, it seems to me. Those conditions were permeated by war hysteria, superheated patriotism, vigilante attacks on slackers. Men were being thrown into prison even for questioning the constitutionality of the draft. It's difficult to recall just how far Americans went in 1917 and 18, how much they lost, as we might say these days, their cool. One can easily understand why the justice has chosen to transcend the normal constitution and uphold the draft, because without the draft, the government's war effort would have collapsed. Patriots themselves, the justices simply were not willing to pay such a high price to sustain the normal constitution, especially when political elites throughout the land were howling for conscription. Besides, had the court declared the draft unconstitutional, executive branch would probably have ignored the ruling, leaving the court defeated, embarrassed, and diminished in constitutional status. It's been said that it is an axiom of constitutional justice that any decision which the court thinks will not be enforced will probably not be made. I think this was an instance of that. Might the Supreme Court of upheld private property rights in the Minnesota moratorium case? Well, I think that would have been surprising. You must consider the situation. The farm economy was a shambles at the beginning of 1934. There had, of course, been an enormous contraction of real income, and in the farm sector, it had been disproportionately great. Farmers all over the country were going broke, losing their homes, losing their properties. Alternative opportunities were not very good in the event that they lost their farms. Here and there across the country, farm violence had broken out, and specifically in the state of Minnesota, the legislation putting a moratorium on mortgage foreclosures had itself been enacted under very ominous pressures from thousands of farmers gathered in the state capitol, making threatening gestures. To strike down in January 1934, the mortgage moratorium laws already enacted at that time by 22 states would have risk setting off an explosion of farm protest and perhaps widespread violence forced to choose between upholding the normal constitution and averting a potential social and political calamity, the majority decided to avert the calamity. The gold clause cases, I believe, presented the court with what amounted to an executive fed a complete. The government had taken possession of the nation's monetary gold stock. It avoided all contractual gold clauses and thereby prompted a multitude of changes in specific contractual performance. Was the court now to say that the government must return the gold coins and certificates to the millions of citizens who had surrendered them, and that all those who had paid legal tender instead of gold must turn around and pay the gold as initially stipulated in their contracts? Clearly, such a ruling would have led to economic chaos. At least the court believed that it would, and counsel for the government argued that it would. And in addition to that, the disruption of the administration's monetary policy would have been brought about, and that policy was already some two years old. The court was simply unwilling to be a party to the creation of such chaos. During World War II, the Supreme Court's virtual abdication again reflected a fait accompli by the legislative and executive branches. The political branches had created a full-blown command economy, complete with conscription of soldiers, physical allocation of raw materials, confiscation of private facilities, controls of wages, prices and rents, rationing of consumer goods, and a great deal more. Was the court deciding cases in 1944 after such policies had been enforced for years to say that they were unconstitutional? It's inconceivable. And in any event, it would have been futile, and the court knew that very well. The best it could do was to continue to go through the motions of judicial review, biding its time in anticipation of the return of normal conditions when the normal constitution would reassert itself over the crisis constitution and genuine judicial review would again become feasible. Events during World War II demonstrate in its clearest form what I call the logic of the crisis constitution. It works as follows. When elites and masses alike believe that national emergency is upon them, it's not the same as national emergency actually being upon them by the way, it's just that they believe it is. They call on the government to do something. The political branches, acting more or less autonomously, adopt policies. By their very nature, such policies entail costs, virtually all of which fall on non-governmental people. The greater the costs, the more likely is public resistance. That's only a corollary to the economist's law of demand. In the extreme, public resistance jeopardizes the government implementing the policy. Anticipating resistance, governments take steps to conceal or obscure the costs of their policies. And one device invariably adopted is the substitution of command and control measures, which hide costs, for fiscal and market means of resource allocation, which reveal costs. The necessary implication of this substitution is the attenuation or destruction of private rights, rights previously protected by the normal constitution. In some, the crisis constitution, like the normal constitution, rests on a broad ideological base. Public attitudes, values, norms, and expectations condition the structure and processes of governmental powers and private rights in both cases. In the 20th century, the American people have come to expect, tolerate, and in many instances demand that the normal constitution be displaced during national emergencies. Governmental officials understand this public disposition and act accordingly, seeking their own objectives within the altered constraints. Conceivably, the dualism of our fundamental institutions could be unproblematical. That is, we could act according to the crisis constitution during national emergencies and according to the normal constitution at all other times. Some people actually assert that this is what has happened. I deny it. It seems to me that history is not conformed to that pattern at all. In fact, the normal constitution to which we revert after a national emergency is never the same as it was before the crisis. To some degree, aspects of the crisis constitution, as expressed in judicial interpretation and even more so in the constitutional system, are incorporated into the normal constitution. Such legacies mark the aftermath of both World Wars and the Great Depression. There's not time today for me to present an enormous amount of evidence for that claim, but in about three months, my book Crisis and Leviathan will be in your bookstore and I recommend that you all rush out and buy one to find the evidence for my claim. The upshot is that the normal constitution of the post-World War II era has fully validated big government in the sense of an active, powerful, highly arbitrary government far less restrained by the constitutional checks and balances of the old normal constitution, a system that once restrained the interventions, if not the ambitions of governmental officials. Today, I think it's worth saying again, emergency powers as such continue to undergird the government's denial of numerous private rights, especially in relation to international travel, commercial, and financial transactions. Should a genuine national emergency arise, I have no doubt how the government will react. The private rights of Americans, I think, are balanced on a very thin constitutional edge and a wide variety of crises, real or contrived, could easily knock them into oblivion. In conclusion, I ask, can anything be done? And I regret that my answer is not a very optimistic. Effective protection of private rights against future governmental invasion under color of emergency seems to me extremely unlikely. Experience of the past decade, that is the experience since passage of the National Emergencies Act, has shown that procedural safeguards are worthless. They make no difference in effect. Not much more hope can be placed in a reconstituted Supreme Court, that is the appointment of justices favoring a return to the old normal constitution. Even if such judges could be found and appointed, their resistance to the crisis constitution could not have more than temporary effect in a national emergency. Before the fierce winds of adverse political actions and hostile public opinion, even the strongest court sooner or later will bend or break. Ultimately, the preservation of the normal constitution against the inroads of the crisis constitution can be accomplished only if the politically influential elites who make policies and mold the opinions of the masses are willing to resist the passions of national emergency. People must understand that reversion to the status quo ante will not occur, that private rights once surrendered are unlikely ever to be recovered fully. If such understanding and a concomitant commitment to private rights were widespread, we would have little to fear. If the dominant ideology gives strong support to the normal constitution, it will survive no matter what else happens. But if the dominant ideology does not give strong support to the normal constitution, it will eventually be overwhelmed by the crisis constitution. Step by step, a ratcheting loss of private rights will attend each episode of national emergency. And we may as well admit, I think that such emergencies are inevitable. It is to me inconceivable that life would be forever after normal. Unfortunately, elites and masses in the United States today with only a few notable exceptions have neither an appreciation of the ratchet process nor a strong commitment to private rights to life, liberty, and property. And therefore, I must sadly conclude that the most likely prospect is for further expansion of the crisis constitution and a corresponding loss of private rights. Thank you.