Owen D Young, who served as president and chairman of GE from 1922-1939, told a story on himself (quoted in the Ida Tarbell biography) about his days as a young lawyer working for Stone & Webster. His assignment was to obtain streetcar franchises for the company in various cities, and he was particularly proud of the contract he negotiated with El Paso…it explicitly gave S&W the right to run trolley tracks “in every street, present and future of the city.”
Shortly after Young left El Paso, though, another guy–a real operator named Theodore Barnsdall–visited the city, and after paying $25000 to the owner of a tiny, mule-powered street railway (which Young had viewed as having no value other than the $50 that the mule was worth) got introduced to the city council. He also obtained a contract from the city–identical to Young’s except for the words “in the middle of every street, present and future.”
The wording of Barnsdall’s contract made the earlier contract useless…and he insisted that S&W pay him a substantial sum to buy him out. They did. (“The bitterest humiliation of my professional life,” said Young in recalling the incident.)
Words do matter, and they matter particularly in contracts, laws, and regulations. You’d think that if anyone would understand this fact, it would be lawyers–a class of people of whom there is no shortage in either the legislative or the executive branches of our government. Yet our Presidential and Congressional leadership strives to push thousand-page bills through the system and turn them into law, heedless of the damage that can be done by insufficiently-thought-out concepts and by simple bad drafting.
We have seem a relatively small example of the harm that can be done by carelessly-passed legislation in the case of the Consumer Product Safety Improvement Act, which is pointlessly causing devastating harm to thousands of businesses–especially small businesses. Multiply this damage by a hundred thousandfold to imagine what could be done to people and to the economy by the energy and healthcare legislation if they are not carefully thought out and drafted.
In my post new frontiers in irresponsibility, I asked “What would we think of a financial manager/advisor who invested all of a family’s money into a particular investment without doing serious due diligence–who, for example, put all the money into purchasing a fast-food franchise without bothering to read either the prospectus or the franchise agreement? How about “violation of fiduciary responsibility?””
Isn’t the whole point of having lawyers in Congress supposed to be that they have sufficient experience with legal matters to ensure that legislation is drafted in a way that unambiguously says what it is intended to say?..and, even more importantly, that they supposedly have sufficient experience in the analysis of complex situations to determine what it should be intended to say? In today’s world, it’s not at all clear that a Congress comprised primaily of lawyers can really have the knowledge and experience to do the proper thinking about the “should” part of the equation–but that’s no excuse for a failure to make a serious and responsible attempt to do so. And when thousand-page bills are rushed through in a matter of days or weeks, even the relatively straighforward matters of drafting are unlikely to be done adequately.
Mr Young learned about the importance of caution in document-writing at a young age, at a cost of probably only a million dollars or so (in today’s money) to his employer. Most of today’s Congressmen are considerably older, and the cost of their lack of caution will likely be infinitely greater–and paid by us all.
(Source note: Ida Tarbell was famed as a journalistic “muckraker”–although she didn’t like the word–and a leading figure of the “progressive” movement. She wrote vitriolically about many business figures and companies, including John D Rockefeller and Standard Oil–it’s interesting that her bio of Owen Young, which I picked up in a used bookstore last week, is almost completely adulatory.)