« Larry Solum's Ten-Part Defense of Originalism
Michael Ramsey
| Main | "Inherent" Judicial Power
Michael Ramsey »

04/18/2017

Eugene Kontorovich on Emoluments
Michael Ramsey

At Volokh Conspiracy, Eugene Kontorovich, George Washington was the first president to stay in the real estate business.  Here is the introduction:

In [the April 14] Wall Street Journal, I have an op-ed, "Did George Washington Take ‘Emoluments’ "? It examines the first president’s extensive and hands-on business affairs to get a better handle on the nature of constitutionally prohibited “foreign emoluments.

Here’s an excerpt (article requires a subscription):

Mr. Trump is not the first president to have business dealings with foreigners. That was actually George Washington, whose conduct in office has been a model for every president.

By the 1790s, Washington was wealthy primarily because of real estate — renting and selling his vast holdings. As with Mr. Trump’s hotels, Washington’s renters or purchasers could include foreigners.

The president received constant reports from his nephew and subsequent managers and wrote to them at least monthly… This belies the notion that the Constitution limits a president’s management of, or benefit from, his existing business ventures.
***
One letter written by Washington deserves great attention in the current debate. On Dec. 12, 1793, Washington wrote to Arthur Young, an officer of the U.K. Board of Agriculture, an entity newly created and funded by Parliament at the initiative of William Pitt. The president asked for Young’s help in renting out his Mount Vernon lands to secure an income for his retirement. Not finding customers in America, he wondered if Young, with his agricultural connections, could find and organize some would-be farmers in his home country and send them over.

The op-ed is drawn from a larger research project on Washington’s business interests and the prohibition on emoluments.

(Thanks to Seth Barrett Tillman for the pointer).

RELATED:  Andy Grewal (Iowa) has posted this article on SSRN: The Foreign Emoluments Clause and the Chief Executive (Minnesota Law Review, Vol. 102, 2017).  Here is the abstract:

The 2016 Presidential election brought widespread attention to a part of the Constitution, the Foreign Emoluments Clause, that had previously enjoyed a peaceful spot in the dustbin of history. That clause generally prohibits U.S. Officers from accepting "emoluments" from foreign governments, absent Congressional consent. Several commentators believe that President Trump will inevitably run into this prohibition, given the global business dealings of the Trump Organization. They read "emolument" as referring to any payment received from a foreign government, such that even a diplomat’s payment of a room reservation fee at the Trump Hotel establishes an impeachable offense.

This Article argues that the commentators have interpreted emoluments far too broadly. Numerous legal authorities show that "emoluments," as used in the Foreign Emoluments Clause, refer to payments from a foreign government made in exchange for the U.S. Officer's performance of services (office-related compensation). The term does not refer to any and all payments from a foreign government.

Putting aside definitional issues, vexing questions arise when determining whether an emolument arises in a transaction between a foreign government and a business entity owned or affiliated with a U.S. Officer. The Office of Legal Counsel and Comptroller General have struggled with the issues, but their approaches suffer from conceptual flaws. This Article proposes an alternative three-part business entity test to help analyze the problems.

After tangling with the definitional questions related to emoluments and the complications presented by business entities, this Article examines whether the activities of the Trump Organization establish violations of the Foreign Emoluments Clause. It concludes that market-rate transactions between the Trump Organization and foreign governments do not come within the clause. However, payments to the Trump Organization in excess of market rates may establish potentially unconstitutional gifts, emoluments, or bribes. Payments made to President Trump personally in exchange for services would also raise constitutional problems.