It Usually Ends With Ed Crane

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This article
was first published in the January-April, 1981 issue of
Libertarian
Forum
, Vol. 14.1-2.

Purged from
Cato!

On Black Friday,
March 27, 1981, at 9:00 A.M. in San Francisco, the “libertarian”
power elite of the Cato Institute, consisting of President Edward
H. Crane III and Other Shareholder Charles G. Koch, revealed its
true nature and its cloven hoof. Crane, aided and abetted by Koch,
ordered me to leave Cato’s regular quarterly board meeting, even
though I am a shareholder and a founding board member of the Cato
Institute. The Crane/Koch action was not only iniquitous and high-handed
but also illegal, as my attorneys informed them before and during
the meeting. They didn’t care. What’s more, as will be explained
shortly, in order to accomplish this foul deed to their own satisfaction,
Crane/Koch literally appropriated and confiscated the shares which
I had naively left in the Cato Wichita office for “safekeeping,”
an act clearly in violation of our agreement as well as contrary
to every tenet of libertarian principle.

I.
The Road to Black Friday

The saga began
a scant three weeks earlier, when Crane sent me two letters, one
from himself and one through his secretary (March 5), airily informing
me of the “desire” of the majority of Cato shareholders (the shareholders
consist of myself, Crane, Koch, and another person, who works in
the Koch offices in Wichita) that I yield my Cato shares to Crane
& Co. The ground for my abrupt dismissal was a “deep-seated”
personal antagonism by myself toward Crane. Evidence cited by Crane
for this antagonism was twofold: (a) various conversations by myself
as relayed by unnamed informers. Hardly sufficient evidence for
this grave action. After all, I could have been jesting to people
who didn’t understand the joke; or, I could have been using the
good old muddy Randian concept of “underscoring” my deep-seated
admiration toward E.H. (b) the only serious evidence cited by Crane
was my Libertarian Forum article of Sept.–Dec. 1980 (“The Clark
Campaign: Never Again”). Crane concluded that, because of this alleged
antagonism, “We believe it would be difficult, if not impossible,
for you to objectively evaluate ongoing and future Cato projects
as a Board member.” In other words, disagreement with Crane automatically
robs one of “objectivity”; unfailing agreement and lickspittle fawning
upon Crane is the only way to make sure that you are superbly and
consistently “objective.”

Due to the
vagaries of the Post Office, it took until March 11 for me to receive
these startling missives. I replied that same day, registering astonishment
at the proceedings. I pointed out that for shareholders to have
a meeting, due notice (usually 10 days) of such meeting must be
sent in advance to every shareholder. But I had had no notice whatever
of any meeting, and therefore the alleged “desire” expressed by
the shareholders was illegal, and null and void. I also pointed
out various oddities of the Crane/secretary letters. In the first
place, the Lib. Forum article dealt only with the disputes I had
had with Crane within the Libertarian Party. There was no mention
of Cato or Cato activities in the article. Furthermore, Crane had
resigned from the NatComm of the LP, in accordance with a Cato Board
resolution last November barring senior officers from any partisan
political activity. So since the Cato Institute, as a tax-exempt
institution under Section 501(c)(3) of the Internal Revenue Code,
is not supposed to have anything to do with partisan politics, how
dare Crane make my stand within the LP a criterion for my continued
shareholder or board membership at Cato?

To quote from
my letter:

“I am also
fascinated that the only concrete evidence you have for this alleged
lack of competence is my article…, where my criticisms of yourself
had nothing to do with the Cato Institute, but were solely directed
toward your activities in the Libertarian Party, a period when you
were on leave from the Cato Institute. I have spent a long time
trying to disassociate the Cato Institute from the Libertarian Party…
And yet you dare to judge my competence as a Cato board member solely
on the basis of a strictly partisan political dispute between us!
Since you are now supposedly out of politics, I would expect that
the entire question had become moot. The critics of the Cato Institute
have been saying for a long time that we are merely a front for
the Libertarian Party. Are you proposing to prove them right?”

Secondly, I
pointed out that usually when a personal dispute arises between
a President and a Board member, if anyone is fired, it’s the President.
Who ever heard of firing a board member?

In my letter
to Crane of March 11, I also demanded that he send me, as a board
member, all the governing documents of the Cato Institute. Despite
repeated requests from myself and my attorneys, Crane persistently
failed to send the full set of documents I requested.

I concluded
my letter to Crane by expressing my intention to appear at the March
27 board meeting and propose various long-needed actions by the
Board: e.g., the naming of a chairman, which had never been done
at Cato, so that Crane informally but regularly would preside over
an “objective” review and evaluation of his own record at Cato.
Also, I expressed my intention for once to have regular notes taken
and minutes sent to every board member, as in most organizations,
shortly after the meeting; I was going to raise the point of various
anomalies and seeming misstatements that Crane had already sent
to the board about the November meeting. I had for a couple of months
been illegitimately cut off by Crane from monthly reports and financial
statements that he had sent to the other board members; and repeated
requests failed to get me a copy of the November minutes. In fact,
Crane was overheard ordering his secretary not to send me the minutes.

On March 19,
my attorney wrote to Crane, setting forth the legal infirmities
in Crane’s stance. Crane’s case, as expressed in his brusque and
totally unresponsive letters of March 16 and 24, was simple to the
point of inanity. His March 16 letter merely sent me a copy of the
Shareholders Agreement and rested his case on that agreement. Crane’s
March 24 letter, in reply to my lawyer’s letter of the 19th, answered
none of his arguments, and simply reiterated that I was off the
board already and that this action was in accordance with the Shareholders
Agreement and state law, and that he had consulted unnamed attorneys
who agreed with his position. Period.

My attorney’s
letter of March 19, however, which in effect remained unanswered,
pointed out several pertinent and clinching facts. First, the Crane
letters could scarcely be taken as written evidence of the “desire”
of the majority shareholders. For (1) I was not given due notice
of any shareholders meeting, which was therefore illegal if held,
and (2) There was no written evidence of any expressed desires by
the other shareholders. Was I supposed to take Crane’s word for
their “desire”? And why? This point can now be strengthened, for
in the Restated Bylaws of the Cato Institute, introduced by Crane
himself at the Black Friday board meeting, Article 111, Section
IV specifically states that: “A written or printed notice of each
shareholders’ meeting, stating the place, day, and hour of the meeting
and… the purpose or purposes of the meeting shall be given…
to each shareholder… This notice shall be sent at least ten days
before the date named for the meeting to each shareholder…” But
I had received no notice whatsoever of the shareholders’ “meeting,”
let alone a notice of 10 days! Therefore, any such meeting, on Crane’s
own terms, was illegal.

Moreover, according
to Cato’s own Restated Bylaws, as well as the laws of Kansas under
which Cato was incorporated, the shareholders are required to hold
annual meetings on the second Tuesday of every January; yet no shareholders’
meetings at all had ever been held until the unheralded “desire”
to kick me out as shareholder had been communicated in some fashion
to Ed Crane.

Finally, and
what would turn out to be particularly important, my attorney replied
to the Crane demand that I send my shares to Cato with the statement
that my shares had probably been left in the Wichita office of the
Cato Institute for safekeeping. He based this insight on a letter
to all the shareholders in my files from Cato’s Wichita office,
dated March 29, 1977, which said: “please advise whether you wish
to hold the stock certificate or if you prefer that I give the certificate
to Florence Johnson for safe keeping.” My attorney pointed out to
Crane that “it would be necessary for the Cato Institute’s Wichita
office to forward the certificate to Professor Rothbard before he
could comply with any properly made request under the Shareholders
Agreement.”

In short, I
remain unalterably a shareholder and therefore a board member of
Cato until (a) I receive a majority request to yield the shares
after a proper shareholders meeting is held for that purpose, with
everyone, including myself, getting 10 days notice of the meeting;
and (b) I endorse the Cato shares over to Crane & Co. Cato would,
at long last, have to hold a proper and legal shareholders meeting,
after which the Wichita office would have to send me the shares,
and then I would have had to endorse them over, before I could be
removed as shareholder and board member.

Furthermore,
that I remain as shareholder and therefore board member until I
endorse the Cato shares is clear from Crane’s own basic case, the
Shareholders Agreement, and also from the Restated Cato Bylaws,
which Crane whipped out at the Black Friday board meeting. (When
asked by my San Francisco attorney when these Restated Bylaws had
been filed, Crane airily dismissed the question with “some time
in the past.”) Article VII, Section 3 of the Restated Bylaws, which
Crane pointed to in support of his position that I was off the Board,
states specifically that “Shares of the Corporation (Cato) shall
only be transferred on its books upon the surrender to the Corporation
of the share certificates duly endorsed or accompanied by proper
evidence of succession, assignment, or authority to transfer. In
that event, the surrendered certificates shall be canceled…” But
I had not endorsed the shares; for one thing, I had never had them
in my possession, since they were being kept in Wichita. Secondly,
I had never assigned or made over any authority to transfer.

In addition,
Article VII, Section 3 goes on to insist that “no shares of the
Corporation shall be transferred…except upon a showing of strict
compliance with the restrictions on transfer imposed by the provisions
set out in that certain Shareholders Agreement dated January 26,
1977…” What are these restrictions? As set forth in Section 6,
they are that, after the majority shareholders make clear their
desire, the shares shall be sent to them “duly endorsed for transfer.”
In short, until they are so endorsed, I remain ineluctably a shareholder
of the Cato Institute.

Time was now
a-fleeting, and it was clear that it would be impossible for Crane/Koch
to comply with Cato’s own internal requirements for kicking me out
as shareholder and board member before the March 27 meeting. Regardless
of what might come later on, I was legally entitled to function
at this meeting as a director of the Cato Institute. It was important
for me to do so, both to protect my rights against the high-handed
and vindictive actions of Crane & Co., and also because I intended
to raise searching questions at this meeting about regularizing
Cato board procedures, and about the competence of Ed Crane as president
of the Institute. For example, it was learned, as my attorney wrote
to Crane on March 19, that Cato has been illegal in the state of
California since March 1, 1979. Crane’s dimwitted failure to comply
with California law could needlessly subject the Cato Institute
to considerable fines. All in all, if the board had been willing
to ask searching questions about Crane’s conduct as president —
something that had never been done before — several employees of
Cato were ready to spill the beans. And so I decided to go to San
Francisco, at my own expense (since Crane insisted on denying me
my right as a board member for reimbursement) to press my case at
the March 27 meeting.

The stage was
set for the ultimate confrontation. Of the seven board members of
Cato, three of us had managed to wring concessions from Crane at
the previous board meeting last November, including passage in amended
form of my resolution that Crane must abstain from any partisan
political activity while functioning as president of the Cato Institute.

II.
Black Friday

We had heard
from the grapevine that Crane would try to stonewall it, and would
pull some stunt or other to prevent me from taking part in the board
meeting. I armed myself with a San Francisco lawyer in advance,
and the two of us walked into the Cato conference room at 8:45,
fifteen minutes early, so as to be able to sit in the room before
the meeting began. The purpose of bringing my attorney was to inform
Crane and the rest of the board of my rights as a board member.

On Crane’s
invitation, my attorney again set forth my case on my right to function
as a board member. When Koch informed us that “the shareholders”
(i.e. Crane and Koch) had met the previous night and exercised their
right to dissolve and reconstitute the board without me on it, I
pointed out that this was not legal procedure, since I had never
been informed of the meeting (certainly not with 10 days notice!)
Koch replied that I was no longer a shareholder. (Catch 22!) Why
not? At this point, Crane pulled out the “Restated Bylaws,” and
pointed to Article VII, Section 3 as his definitive case. When my
attorney and myself pointed out that this article precisely supported
my case rather than his, Crane (see above) brusquely dismissed my
case as a “legal technicality.” So, Crane, is that what property
rights are in your eyes, just a “legal technicality”? Apparently
so, for at that point Crane informed my dumfounded attorney that
they had taken my Cato shares, held only for “safekeeping” at Wichita,
and simply “canceled” them, and so that was the end of that! My
shares were only in Wichita for safekeeping, and so Crane &
Co. had violated the clear requirement in their own agreement and
bylaws that I had to endorse the shares over to them before I was
off the shareholders. But the fact that they had clearly violated
my property rights in my shares was just a “legal technicality”!
The blackguards had grabbed my shares!

In short, Crane
was arrogantly informing me and my attorney that my property, held
for “safekeeping” in Wichita, had been seized by Crane and his confederates
and used for their own purposes. For if they had bothered preserving
my property rights and sent me the shares for endorsement, there
would not have been time to keep me from serving at this March meeting.
So determined were they to exercise their power that they were willing
and eager to perpetrate this outrage.

When Crane
refused to listen to any legal protests and demanded that we leave,
my stunned attorney looked around the conference room and asked:
“Doesn’t anyone else have anything to say?” (Crane and Koch had
done all the talking among the board members.) Not a word, not a
peep from anyone. We walked out, with me announcing that “this action
is illegal, and that therefore any further decisions taken at this
meeting are illegal.”

All this leads
me to ruminate on something I have been pondering for a long time.
Let each and every one of you, dear readers, consider this crucial
question: How many fellow libertarians would you trust to guard
your back in an ambush? How many would you trust? As a friend and
longtime libertarian observed in reply: “Ambush, hell. How many
libertarians would you allow in the same room with you and trust
not to poison your food?”

There are several
morals to this little story. One is: “Don’t leave anything for safekeeping
in Wichita, whether it be a stick of bubblegum or your precious
soul.” Another is: Just because someone says he’s a “libertarian,”
doesn’t mean he won’t rob you blind if he has the chance.

Crane &
Co. must be made to understand that the libertarian movement is
after all an ideological movement. And so there must be at least
some libertarians who hold their ideology dear, who will not be
bought, who will not bend the knee to a new set of Masters even
if they don’t yet call themselves the State. If there is any justice
left on this earth, the libertarian movement cannot and will not
be run like a giant corporation. We will brook no “chain of command”
that rides roughshod over rights and even over human decency. The
movement is too big for any set of power-hungry villains to control.

III.
The Background: The Cato Institute

When Cato was
first founded in 1976, transformed from what previously was the
Charles Koch Foundation, I accepted a post as a founding board member
with enthusiasm. Here was what the libertarian movement seemed to
need — a well-funded organization that would gather to itself the
Best and the Brightest in the movement, find new and able libertarians,
and then advance sound and radical libertarian principles and their
applications in the real world.

But that, alas,
was only the theory. For while Cato has done many good things, the
reality of the Cato Institute was unfortunately all too different.
And much of that difference can be laid squarely at the door of
its President, Ed Crane.

It has been
well said that, after a while, the feel and spirit of any organization
takes on the coloration of its head. Since I worked at Cato in San
Francisco for virtually the first two and a half years of its existence,
I was able to confirm this insight firsthand at Cato, and also to
find out what the Cato spirit might be. After the first few months,
it became all too clear that the dominant spirit at the Cato Institute
was one of paranoia, intense hatred, back-stabbing, and endless
crises. At first, the crises, all revolving around personal relations
between Crane and other Cato executives, occurred only once every
few months. But soon the frequency accelerated, until crises occurred
once a week, and then every day or two. I have noted for a long
time that the logo of the Cato Institute should be the closing door,
because if you talk to anyone at Cato about anything except the
weather, he or she will say, “Wait a minute, let me close the door.”

The atmosphere
at Cato is reminiscent of nothing so much as the last days of the
Nixon White House. Everything is covered over with layers of secrecy;
one of Crane’s favorite phrases is an angry, “Who told you that?”
(Such is the mania at Cato that a large part of the time the “who”
was Crane himself.) Usually, there is at least one hate-object for
Crane among his top executives. Crane and the executive will stop
talking to each other for many months, even years, and, while the
executive in question twists slowly, slowly in the wind (to use
a favorite Watergateism), Crane will organize hate sessions against
the unfortunate victim among his coterie of fawning toadies. All
this is all too reminiscent of the “hate Emanuel Goldstein” sessions
in Orwell’s 1984, in which Goldstein’s face is flashed on the screen
and everyone is expected to heap abuse upon his image.

Finally, after
many tense and excruciating months, the victim-hate object is fired
or pressured out, and Crane soon finds another victim. For Crane,
repeated firings of the “disloyal” has several important uses. One
is that he can then blame all the incredible mismanagement and foul-ups
at Cato on the unfortunate hate object; sometimes, in fact, the
victim is blamed for misdeeds committed months, even years after
he has been booted out of Cato. Their evil, apparently, lives after
them, trailing endless clouds of alibis for Ed Crane. Not only were
they disloyal; they apparently engaged in endless plots against
the Master. What neither Crane nor his mentors seem to understand
is that if you treat everyone as if they are eternally plotting
against you, pretty soon by God they will start such plotting. And
so paranoia acts as a self-fulfilling prophecy.

In a magnificent
burst of speaking truth to power, a top executive of Cato recently
resigned (on a matter unconnected with Black Friday), and wrote
to Crane (on March 13, 1981): “In a movement filled with backbiting,
I have seldom encountered anyone quite as ruthless or as consistently
unprofessional as you. It is simply impossible for me to continue
to work under someone whose greatest glory is humiliating, punishing,
or purging his enemies, real or imagined, or ‘getting even’ with
his own organization. You do not seem to realize that if you treat
someone as an enemy, he soon becomes one, or how easy it would have
been to win the loyalty of so many of those people who now justifiably
regard you with suspicion.” Bravo!

Take a list
of top Cato executives of the past and you will find some of the
truly best and brightest people in the libertarian movement. It
is a veritable drum roll:

  • Roger Lea
    MacBride, board member and shareholder
  • David Theroux,
    vice president
  • Leonard
    P. Liggio, vice president
  • Williamson
    M. Evers, vice president and editor of Inquiry
  • Ronald Hamowy,
    editor of Inquiry.

I will now
add myself to what is really a roll of honor.

Where they
now? They are most emphatically not at Cato.

Why? Because
of one man and one man alone, Edward H. Crane III. We must put the
blame on Crane, for that is precisely where it belongs.

There are only
two choices here. Either Crane is a John Galt figure, a giant among
lesser pygmies, envied and therefore plotted against by all the
rest of us creeps and lowlifes. Or else: it is Crane who is out
of step, and not the rest of the world. There is no middle way,
no wimpy way out of the horns of this dilemma. Either all the rest
of us are Bad Guys, or Crane is the Bad Guy. The movement must choose.

And furthermore,
if Crane is the Good Guy, how come he had the rotten judgment to
select as his top executives all these people who turned out, on
his own account, to be Bad Guys? What kind of top manager is that?

OK, let’s stipulate
that personnel relations at Cato are a walking disaster. What about
other aspects of the Crane Presidency? One important function of
the president of a nonprofit organization is to raise funds. But
Crane has shown no aptitude whatsoever in fundraising except from
one man, The Donor. Direct mail fundraising hasn’t worked, as one
might expect from an ideological organization. Only personal fundraising
by the President can work, and, considering what we can very kindly
call. Crane’s “abrasive” personality, this is not a live option
at Cato. How much longer will the Donor be willing to put up with
this bizarre state of affairs? Who knows? But whatever happens,
it remains an odd situation for an organization like Cato to have
a President who can’t fund-raise his way out of a paper bag.

Another function
of a President is to keep costs down and preside over a tight budget.
But even Crane’s most fervent supporters admit that cost management
is not his forte and that, instead, he spends money as if there
is no tomorrow. It was only in the year that Crane was on leave
to run the Clark campaign that Cato managed to live within its budget.
If I had been allowed to be at the board meeting I would have raised
a question, for example, about $15,000 that Crane reportedly spent
on a cocktail party in Washington to herald the Ferrara Social Security
book, a party that brought in virtually no book orders, but presumably
enhanced whatever image Cato may have among the movers and shakers
of the Reagan administration.

Veteran Crane-watchers,
even those favorable to him, will stipulate all of this: that he
is a disaster in personal relations, a nothing fund-raiser, and
heedless of costs or budgets. Furthermore, they will concede another
important point: that Eddie gets bored with any existing programs,
and that therefore he is a lousy manager of any continuing institutions
within Cato. It is this deep-seated boredom, they feel, that accounts
for Crane’s fascination with presidential campaigns, which are short-lived,
one-shot, and exciting over their brief span.

If
Crane is a disastrous manager of existing programs, he is in still
other ways singularly unequipped to be the head of a libertarian
public policy institute. When I first got to Cato in 1977, I was
told by a top Cato officer and Crane crony that Crane despised intellectuals
and libertarian theorists and that he read practically nothing,
whether books, magazines, or newspapers. At first I resisted this
charge, but it turned out to be all too true. The heads of other
public policy think tanks may not be writers or theorists themselves,
but they are often genuinely fond of scholarship and of ideas and
are therefore well equipped preside over efforts to translate them
into more practical applications or more readable form. Libertarian
institutions deserve no less, but clearly Crane is not the man for
the job.

So — going
down this grisly roll call of Crane failings, what in the world
is supposed to be his forte? Why is he still in a job which, by
any sensible criterion, he is so little qualified to hold? This
question has wasted countless man-hours over lunch, drinks, and
office chitchat at the Cato Institute. Why is this man there? All
of us may guess, but none knows the answer. However, we might as
well consider the one favorable item which Crane-watchers have come
up with: that he’s a “good idea man,” that he comes up with fruitful
ideas for new projects. In short, he may not be able to run an existing
institution or program, but he can come up with fruitful new ones;
in a large corporation, he might have been Vice President in Charge
of Development or whatever.

But even this
does not really hold water. There has scarcely been a creative new
idea at Cato since its first year; old programs, such as Inquiry
and the Cato Seminars, have simply continued in place. And Crane
has never made a positive contribution to the contents of Inquiry.
The best recent program, the quarterly Cato Journal, was not Crane’s
idea at all, and was instituted when he was away on leave. And the
best new idea hatched at Cato in years, the concept of a Cato think
tank at some university — with fellowships, resident scholars and
publishing the Cato Journal — was shot down angrily by Crane when
he returned from his campaign leave. Probably the greatest single
need of the movement right now is for a scholarly university think
tank to foster interdisciplinary libertarian ideas. But Crane, in
his deep contempt for the human mind, squashed the idea and instead
denounced those who drew it up as plotters against his reign. So
much for Crane the man of ideas.

So we are left
with the puzzle: why is this man there?

We come now
to the final bone of contention: the interpenetration of the Cato
Institute and the Libertarian Party. When I first got to Cato, I
was told by several top Cato officers that the Cato Institute had
turned out to be primarily a “front” for the Libertarian Party,
an organization designed to funnel material and personnel into LP
campaigns, and to provide a resting place for Crane in between presidential
races. I told them that this was ridiculous, that I was a founding
board member of Cato, and that there was a key difference (which
many non-or quasi-libertarians fail to understand) between libertarianism
and the Libertarian Party. That Cato had nothing to do with the
party — as indeed it was legally bound as a tax-exempt organization
— but was simply founded to spread libertarian ideas. They smiled
back knowingly and insisted they were right.

Though my own
rift with Crane began in the spring of 1979, no effort was made
to remove me from the Cato board until this spring. To me it is
clear that the real cause was not the Lib. Forum article but the
success which I and others had at the November board meeting in
beginning to call Crane to account. I had been a one-man needler
of Crane’s management at Cato board meetings for a year or more;
until last November, I could be ignored as having only nuisance
value, since I was just one lone voice tolerated on the board. But
last November, suddenly, I had two allies, almost a majority of
the Cato board. Over Crane’s initial opposition, I managed to carry
the board resolution barring all senior Cato officers from partisan
political activity, which helped insure Cato’s continued nonprofit
tax-exempt status. Also at the board meeting we managed to set up
a Salary Review Committee, to review the salaries of all the top
executives — a commonplace for most boards but unheard of at Cato,
where Crane prefers to run everything out of his hip pocket. It
was because of this success that I had to go, and go quickly.

While all the
above failings of Crane certainly played a large cumulative role,
my own break with Crane came sharply in the spring of 1979. Typically,
it came over matters that involved not only the Cato Institute but
also the Libertarian Party and the movement as a whole.

The Sarajevo
of the Cato Institute was a seemingly simple act: the hiring by
Crane of Dr. David Henderson as his policy analyst and economist.
The hiring of Henderson came as a thunderclap at Cato. Why was he
hired? The firestorm of opposition to Henderson that broke out among
all the Cato executives was based not so much on personal hostility
as on the fact that the Cato Institute was supposed to be deeply
committed to Austrian economics. Yet Henderson was not only not
an Austrian but strongly hostile. So why was he hired? Especially
since all those at Cato with economic backgrounds were bitterly
opposed to the appointment.

Henderson is
long gone, as his appointment turned out to be yet another Crane
mistake, this time admitted as such by all concerned. Yet we never
did find out precisely why Henderson was hired, apart for being
a way from Crane to impose his will against almost unanimous advice.
But in the course of inquiry into the Henderson Affair, we discovered
several fascinating and horrifying festering sores underneath the
surface of Cranedom. A mighty can of worms was now uncovered.

First, we all
found to our astonishment that the only person strongly advising
Crane to hire Henderson was Roy A. Childs, Jr. Not only did Childs
have no official post at Cato but Childs knew zilch about economics.
So how did he come to be picking Cato’s economists? What was going
on here? What was the Crane/Childs connection?

Deeper trauma
ensued. For at this point we heard the following incredible story
from a top member of the Crane/Childs cabal who suddenly defected
and was promptly removed from Cato:

The essence
of the story was this. Crane, and Childs as his Court Intellectual
and apologist, began to discover a rising tide of hatred of Cato
emerging within the Libertarian Party. Crane had finally succeeded,
by early February, in inducing Ed Clark to run for President, and
the mighty Clark vs. Hunscher race was now underway. But how could
Clark win and, more important, how could Crane run his campaign,
if Hunscher could run successfully as the anti-Cato candidate within
the Party? A scapegoat would have to be found.

In addition,
and more importantly, Crane/Childs had decided on a critical paradigm
shift for the Libertarian Party and for the movement as a whole.
Crane and his institutions — Libertarian Review and Students for
a Libertarian Society — had previously been committed to pure, radical
libertarian principle. This would now have to be diluted and scrapped,
and a paradigm shift made to water down principle and sell out in
behalf of big numbers: money, media influence, and votes. The Clark
campaign, once he was successfully nominated, would be the embodiment
of the new sellout opportunism within the Party.

The first fruits
of the new Cranian opportunism was a shift in the line of LR and
SLS on nuclear power in the summer of ’79, which was not an isolated
issue but the beginning of the end of Cranian adherence to libertarianism.
Or rather, the real beginning was the Henderson appointment, which,
according to the Cranian defector, was a move away from Austrianism
and laissez-faire and toward the more respectable Freidmanite economics.
In one case Friedmanism, in the other low-tax liberalism! All parts
of the new paradigm would hang together.

Also, said
our defector, the planned scapegoat for Crane/Childs was myself
and particularly Bill Evers. Personal friction had arisen between
Crane and Evers the previous year. As publisher of Inquiry, Crane
was responsible for the business end of the magazine. When Inquiry
began to face mounting deficits due to Crane’s mismanagement, he
conveniently placed the blame on Evers, who as editor had no responsibility
for the magazine’s budget and was not even shown a copy. In the
meanwhile, Childs had conceived a deep personal antipathy to Evers
for a long time, to the extent of chanting publicly as well as privately
“Death to Evers” at every opportunity. There seemed to be no objective
reason for Childs’ malevolent obsession with Evers, and here we
are in the murky area of psychopathology. The best judgment of objective
observers put the blame on a deep-seated envy of Evers: the two
were the same age and both had been libertarians for a long time.

The friction
and antagonism were there, and to top it off, Evers and myself were,
no doubt about it, theoretical purists, quick to denounce deviations
from libertarian principle. So we, and particularly Evers, were
to be selected as scapegoats. According to our defector, Childs
was deputized by Crane to spend virtually full time calling up LP
members across the country and denouncing Evers and myself as doctrinaire
purists, thereby deflecting anti-Cato fire to ourselves, and also
paving the way for future sellouts.

That, said
our intrepid defector, was the plan, and it was being carried out.
Evers would eventually be kicked out, and I would be quietly shifted
from any decision-making role to being exploited as a resource-person
and general totem. True, all too true, with the exception that I
didn’t go quietly.

This story
hit me like a sledgehammer. I couldn’t believe it. Surely it couldn’t
be true! Surely my informant had cracked under what would eventually
become the well-known Cato syndrome? I knew about the Evers/Crane
friction, but Crane and I had always gotten along and Childs had
been one of my closest friends for many years. I thought: Say it
ain’t true, Roy! So I proceeded to ask around. Did such a cabal
exist? The more I found out the more our defector’s story was confirmed.
The moment of truth came when I confronted Childs and asked him
point-blank. Childs, who had begun to affect a steely-eyed look,
presumably adopted from his mentor, in essence confirmed the defector’s
story. Childs’ odious pronouncement ended the conversation: “The
trouble with you is you’re too loyal to your friends. (i.e. Evers).”

The great Cato
Rift had begun.

Epilogue:
It Usually Ends…

So that’s it.
Another Crane dissenter has become his victim and been purged from
Cato. But how many Pyrrhic victories will this man be able to sustain?
How long will this be permitted to go on?

The last word
on all this was recently sent to me by an old friend and ex-Cato
bigwig. He wrote: “Murray, when you write your book or article on
the history of the libertarian movement of the 1980′s why don’t
you entitle it: It Usually Ends with Ed Crane?”

Reprinted
from Mises.org.

Murray
N. Rothbard
(1926–1995) was dean of the Austrian School,
founder of modern libertarianism, and chief academic officer of
the Mises Institute. He was
also editor — with Lew Rockwell — of The
Rothbard-Rockwell Report
, and appointed Lew as his literary
executor. See
his books.

The
Best of Murray Rothbard

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