L. Neil Smith's
THE LIBERTARIAN ENTERPRISE
Number 112, March 12, 2001
Ides of Millenium
Repeal Depression-Era Libel Law ... For Starters
by Vin Suprynowicz
Special to TLE
A lot of unconstitutional bunk got peddled back in the early 1930s, as governments federal and local scrambled to remedy an economic debacle resulting (as the late Murray Rothbard exhaustively demonstrated in America's Great Depression) from a double whammy of almost metaphysical proportions: a wanton increase in the paper money supply (and, thus, of credit) during the Roaring '20s, followed by the refusal of that "great interventionist," Herbert Hoover, to let wages correct downward along with prices after the resulting crash of '29.
With jaw-dropping predictability, government thus created vast unemployment through its ill-considered interventions in the economy — and then announced with a straight face that the only possible solution was ... more government intervention.
Many of the resulting attempts to infringe Americans' historic economic and political liberties — socializing the nation's economy on the bizarre assumption that the best "fix" would be to mimic policies which had already left millions starving in Lenin's Russia — were rightly thrown out as unconstitutional as soon as they reached the courts.
But just as many of these hastily-cobbled-together Ponzi schemes and bureaucratic full-employment programs survived, to be sanctified over time as "vital elements of our wise and benevolent social safety net."
How silly were some of these measures? Hoping to stem bank runs on local financial institutions which had plunged incautiously in the speculative boom, Nevada legislators in 1931 enacted a law which made it illegal to criticize a Nevada bank or its financial viability in print — even if the statements were provably true.
Though the financial crisis passed and is long since forgotten, this Nevada law was still on the books when Senior Deputy Attorney General Doug Walther notified the Culinary Union back in 1996 that a leaflet the union was circulating — stating that Commercial Bank was losing money — ran them afoul of the long-forgotten law.
(The union was in a labor dispute with the Santa Fe Casino at the time — and then-state Sen. Sue Lowden, an owner of the casino, sat on the board of Commercial Bank, which later merged with Colonial Bank.)
Fortunately, Senior U.S. District Judge Lloyd George forbade the state from enforcing the law, which he held to be in direct violation of the First Amendment's free-speech guarantees.
So far so good.
Yes, it would be reprehensible for anyone to malign a legitimate business for political reasons. But banks have full access to the courts to file their own civil actions for libel or slander if they see fit . A pre-emptive ban on consumers stating an opinion about a local enterprise's policies — let alone citing provably accurate facts — has no place in a free country.
Now comes state Sen. Terry Care, D-Las Vegas — a former television news director — proposing legislation in Carson City this year to repeal the dated and ill-conceived 1931 ordinance, entirely.
Good. It's not enough to say a bad law "shouldn't be enforced," since that always leaves open the possibility of the old blunderbuss being rolled out and used — selectively or vindictively — at some time in future.
"I just thought it was offensive to the First Amendment to have a statute like that," sayeth Mr. Care, and right he is. (And I hope we can expect Mr. Care to carry on from here, actively seeking repeal of all state laws which offend against the Second, Ninth, and Tenth amendments, as well.)
In the meantime ... let's get this bad law off the books.