What Goes Around Comes Around
by Skip Oliva
be repeating itself in the Koch vs. Cato battle, at least if you
believe the late Murray Rothbards account of his 1981 purge
as a Cato shareholder and director. A
1981 article in Rothbards Libertarian Forum essentially
portrays Ed Crane in much the same light that Crane and his allies
now portray Charles Koch. Only in Rothbards case, Crane and
Koch worked together to oust him.
In the present
dispute, Crane and his supporters allege the Kochs want control
of Cato so they can use it to support the Republican Party. In the
1970s, Rothbard said it was Crane, with Koch, who tried to do the
same thing, only to support the Libertarian Party.
Party ran its first national campaign in 1972, with John Hospers
as its presidential nominee. Hospers actually received one electoral
vote from a Virginia Republican who broke ranks. That rogue elector
was Roger MacBride, one of the original five Cato shareholders.
MacBride was the 1976 Libertarian presidential nominee, where he
received about 180,000 votes.
In 1980, the
Libertarian Party nominated Ed Clark for president. His running
mate was David Koch, one of the current Cato shareholders and directors.
Clark and Koch ran as low-tax liberals, which prompted
a split between the more radical Rothbard and Ed Crane, a Clark/Koch
In his 1981
account, Rothbard charged Crane with engaging in the same level
of inappropriate politicking as Crane now accuses Koch of:
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.
to what Crane supporter Jerry Taylor said yesterday:
told [Cato chairman Bob Levy] that they intended to use their
board majority to remove Ed Crane from Cato and transform our
Institute into an intellectual ammo-shop for American for Prosperity
and other allied (presumably, Koch-controlled) organizations.
That statement of intent is certainly consistent with what weve
been hearing from both Kevin Gentry and Nancy Pfotenauer. Theyve
frequently complained during their short time on our board that
Cato wasnt doing enough to defeat President Obama in November
and that we werent working closely enough with grass roots
activists like those at AFP.
the modern-day Crane, said that Cato was legally bound
not to have anything to do with political parties and that the organization
was simply founded to spread libertarian ideas.
After the 1980
election, where the Clark/Koch ticket got less than a million votes,
Rothbard penned a lengthy criticism of the campaign. This apparently
prompted Charles Koch and Crane to remove Rothbard from Cato entirely.
They had already removed MacBride, the original fourth shareholder,
so the two of them constituted a majority.
he received two letters from Crane on March 11, 1981, dated March
5, informing Rothbard of Crane and Kochs decision to remove
Rothbard pursuant to the 1977 Shareholders Agreement. Rothbard sent
a response that same day, objecting to the other two acting without
legally calling a shareholders meeting. Rothbard said he would
appear at the next scheduled board meeting on March 27 in San Francisco
to plea his case.
On March 19,
Rothbards attorney sent a letter to Crane further attacking
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 Cranes word for their desire? And why?
The point can now be strengthened, for in the Restated Bylaws
of the Cato Institute, introduced by Crane himself at the [March
27] board meeting, Article III, 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
. 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 Cranes own terms, was illegal.
on to say that his actual stock certificates, which were kept in
Catos Kansas office, were simply seized by Crane and Koch
without his endorsement. As Rothbard noted, the Cato bylaws required
strict compliance with the restrictions on transfers
imposed by the Shareholders Agreement. That meant he had to endorse
the certificates, otherwise there was no legal transfer.
At the subsequent
March 27 board meeting Cato had seven directors then
Rothbard said Crane and Koch announced the two of them had
met the previous night and exercised their right to dissolve and
reconstitute the board without [Rothbard] on it. When Rothbard
tried to point out Cranes failure to comply with the bylaws
and the Shareholders Agreement, Crane brusquely dismissed
my case as a legal technicality. Now, 31 years
later, its the Kochs that have filed suit accusing Crane of
failing to strictly comply with the terms of the 1985 Shareholders
Agreement and the Cato bylaws.
Rothbard's "It Usually Ends With Ed Crane"
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