No. 22574 - State of West Virginia ex rel. Glen B. Gainer III,
Auditor of the State of West Virginia v. The West
Virginia Board of Investments
Cleckley, J., concurring:
I concur in the entirety of the excellent majority opinion. I write separately only to add a few observations. First, as Justice Workman accurately described, the primary impetus behind the inclusion of Section 6 of Article X in the 1863 Constitution was a desire by a majoritySee footnote 1 1 of those voting to avoid the burdensome and unwise debts that had been incurred by the mother commonwealth of Virginia and by other states during the decades preceding the Civil War. Also influential, however, was a desire to avoid another (though related) undesirable development
that plagued Virginia. Many in what is now West Virginia believed,
and resented, that political cronyism and bias for eastern
development controlled state investments rather than need or sound
investment strategy. See, e.g., Remarks of Delegate Van Winkle, 3
Debates and Proceedings of the First Constitutional Convention of
West Virginia at 228-29. State stock purchases typically
benefitted those entities which were connected with powerful
eastern legislators, and this practice offended the westerners'
sectional and moral sensibilities. Clearly, such favoritism would
detract from good government and wise decision making.
Second, the framers who opposed state investment in
private corporations and individuals did so because they believed
it unsound to turn public dollars over to private entities whose
overriding motive is profit, not the public interest.See footnote 2 A transfer of public money to support capitalistic enterprises thus meant that
those funds would be diverted to advance private profit making and
not necessarily the best interests of the people. Admittedly, what
is good for corporate profits is sometimes good for the public; yet
corporate and public aspirations often run at cross-purposes.
Third, I believe Section 6 prevents still another evil:
when government officials invest in private corporations, they
invite favorable treatment for the objects of the investments and,
perhaps, unfavorable treatment for the objects' competitors. Thus,
a state investment portfolio can disrupt the essential objectivity
that government-as-regulator should maintain, both in its
legislative and enforcement capacities.
These potential evils are at least implicated by the facts of this case. Whether such harms could be prevented by the creation of less drastic procedural safeguards and whether the need for a greater return on state investments of pension and similar funds outweigh the concerns regarding state indebtedness, political favoritism, and profiteering are not questions for us to decide. As Justice Workman correctly explains, we are not free to ignore the clear commands of the Constitution; only the people voting on a constitutional amendment can change Section 6's answers to the above questions and decide that modern pension arrangements call for a modified attitude about state investment in private corporations.See footnote 3
Footnote: 1 1It was a majority, but barely. An effort to delete from Section 6 the prohibition on state investment in private corporations and persons failed by a scant vote of 22-21, largely along sectional lines. 3 Debates and Proceedings of the First Constitutional Convention of West Virginia 247 (1861-1863). Indeed, those favoring investment (primarily delegates from the undeveloped southern counties) achieved a late convention compromise for inclusion in the finance article of the following section, which seriously limited the impact of Section 6:
"If the State become a stockholder in any
association or corporation for purposes of
internal improvement, such stock shall be
paid for at the time of subscribing, or a tax
shall be levied for the ensuing year,
sufficient to pay the subscription in full."
3 Debates and Proceedings of the First Constitutional Convention of West Virginia at 878. It is significant that the 1872 convention dropped the Section 7 compromise but retained Section 6 in full force. That fact is even more remarkable given that the 1872 convention was dominated by ex-Confederates, most of whom came from those portions of the State that in 1863 most needed and therefore sought investment in internal improvements.
Footnote: 2 See, e.g., Remarks of Delegate Dering, 3 Debates and Proceedings of the First Constitutional Convention of West Virginia at 201:
"It would be ruinous to the State if we
should agree to strike out 'corporations or
person' in this section and thereby authorize
the legislature to loan the credit of the
State to corporations or individuals. What
is a corporation? A soulless thing organized
to make money for its projectors without
regard to any other purpose. The gentleman
from Doddridge and other gentlemen here want
to lend and pledge the credit of the State to
these soulless corporations, to cities and
towns, corporations and persons. He proposes
to incorporate in our organic law an
invitation for all time to come for
adventurers and cheats and companies
organized for all sorts of questionable
purposes throughout the whole country to come in and lay siege to our treasury and empty its coffers."
Footnote: 3 I do not mean to imply a position--one way or another-- regarding the desirability of such an amendment. Certainly, recent experiences in this State, see State v. Morgan Stanley & Co., Inc.,___ W. Va. ___, ___ S.E.2d ___ (No. 22358 __\
/__/__), and in Orange County, California, indicate that we need, at a minimum, safeguards against officials who seek to reap big profits through speculative investments of public funds. Whether and what safeguards are sufficient are matters beyond our domain.