The Legacy of John Paul Stevens: Illinois, the Hardest Place to Run a Corporation

Towards the end of David Savage’s piece on John Paul Stevens, this:

Stevens’ early life had more than its share of grand moments and deep tragedies. He was born in 1920, the youngest of four boys in a wealthy family. When he was 7, his father opened the 28-story Stevens Hotel on Michigan Avenue (now the Hilton Chicago), overlooking the lake…

…his family’s prospects had darkened with the Great Depression. The stock market had crashed two years after the Stevens Hotel had opened, and the ensuing business collapse emptied most of its rooms. After the hotel was driven into bankruptcy, Stevens’ father, uncle and grandfather were accused of having embezzled more than $1 million from the family-run life insurance company to prop up the failing hotel.

His grandfather suffered a stroke, and his uncle committed suicide. Left to stand trial alone, Stevens’ father was convicted and faced a long prison term. A year later, however, the Illinois Supreme Court unanimously overturned the conviction and said that transferring money from one family business to another did not amount to embezzlement.

Stevens spoke little about his family’s ordeal, but it surely helped inspire a lifelong faith in the fairness of judges and the courts.

If that’s the lesson that Stevens learned from this ordeal–and, for those old line WASP types like Stevens, that lesson is a natural–it explains the divergence between his idea and that of a court grown more conservative.  Others who eschewed the left’s siren song of state ownership and care for everything came to the conclusion that a system which took as long as it did in Stevens’ father’s case to figure out that a family’s wealth is the family’s has serious problems.

Few places in the US have a schizoid attitude towards corporations and wealth so firmly entrenched in the legal system than Illinois.  On the one hand the state’s dominant city, Chicago, is the “city of big shoulders,” the place where capitalists (like my own ancestors) could do well and build a great city and state.  On the other same Chicago is the home of Saul Alinsky, the cosummate radical and community organiser who inspired two of the Democrat Party’s current top power holders: Hillary Clinton and, of course, Barack Obama.  The result locally is a state with high taxes, convoluted laws and corporate procedures which are an absolute mess to keep up with.  (I think I can speak with some authority on this: our own company was an Illinois corporation for 115 years.)  It’s also a system which can allow the perseverance of a political machine (the Daley one) for such an extended period.  Few people can remember the time when the Daley crew didn’t run Chicago in one form or another, the time between father and son is simply an “interregnum.”

The fact that it took so long for the Illinois judicial system to figure out that “…transferring money from one family business to another did not amount to embezzlement” should have been a lesson that something was deeply wrong with the system itself.  It’s probably one event that encouraged Stevens to exit the world of commerce for that of law, something that many scions of wealthy WASP families did.  He wanted to be on the winning side this time, and given that he spent 35 years on the Supreme Court, in that sense he certainly was.

For others of us, it took a while to figure things out, but eventually we left Chicago and Illinois for “greener” pastures.  (The legal system wasn’t a direct driving force, but the business environment was.)  Now we have a Chicago community organiser for a President (to say nothing of his eminence grise, Rahm Emmanuel) who intends to push the system firmly leftward, to the place where no one outside the system (read: government) can survive.  Under those circumstances, the only exit is emigration, and that may explain in part why our Congress is instituting what amount to capital controls via the tax system.

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