Emoluments Clause Does Not Ban Sales to Foreigners

The Constitution is not hostile to the free market or international trade. Indeed, many Constitutional provisions are designed to protect them, such as the Contracts Clause, the Takings Clause, and the Constitution’s ban on state taxes on exports and imports.

And early American presidents often owned businesses, which they kept operating even while in office. As Greg Jarrett notes, “The first five presidents were farmers and plantation owners who maintained their businesses while in office. Some of their crops, especially tobacco, were sold abroad to companies and foreign governments.”

So it is more than a little strange to see claims that President Trump has somehow violated the Constitution’s Emoluments Clause merely by owning hotels and other business interests that are patronized by foreigners. Yet, as law professor Eugene Kontorovich notes, “earlier this year a group of law professors and prominent attorneys filed a lawsuit [alleging that] the Trump Organization’s hotel rentals to a Chinese state-owned bank—along with royalties on ‘The Apprentice’ from state television in countries such as Vietnam—violate the Constitution’s Foreign Emoluments Clause.”

This odd reading of the Emoluments Clause is contrary to its historical understanding, notes Jarrett, since sales to foreigners by the Founding Fathers “were never regarded, even by their political opponents, as emoluments because they were unrelated to the holding of office.”

The framers of the Emoluments Clause were concerned about gifts to officials from foreign powers – such as the money France gave a British king to enter into a treaty ceding territory, and the pension it gave him that enabled him to avoid summoning parliament; and lavish gifts to diplomats by kings. There is little evidence that it was aimed at sales at market prices, even to foreign officials.

Indeed, as Prof. Kontorovich notes, President George Washington even asked a British official to help find renters for his land: “On Dec. 12, 1793, Washington wrote to Arthur Young, an officer of the U.K. Board of Agriculture…The president asked for Young’s help in renting out his Mount Vernon lands to secure an income for his retirement. Not finding customers in America, he wondered if Young, with his agricultural connections, could find and organize some would-be farmers in his home country and send them over.”

But left-leaning academics are suspicious of the free market, and have come up with an anti-market interpretation of the Emoluments Clause that essentially requires presidents to divest such business interests (presumably, at fire sale prices) before assuming office. In the Los Angeles Times, a May 14 op-ed claimed “the Constitution’s emoluments clause” is based on “a dread of corruption” from “officeholders” tainted by “the scrum of the marketplace,” and that Trump’s continuing business holdings are “violating it.”

As National Review notes, these expansive, anti-market interpretations of the Emoluments Clause would snare not just Trump, but also other modern presidents such as Barack Obama, who obtained copyrights while in office from many foreign governments to sell his books overseas: The law professors and attorneys bringing the Citizens for Responsibility and Ethics in Washington (CREW) lawsuit “advocate a broad view of ‘emoluments’ to cover any sort of commerce between any foreign sovereign entity and the Trump Organization, a view so broad that it would hold President Obama to have violated the Foreign Emoluments Clause every time a foreign public library bought a copy of Dreams of My Father…By contrast, University of Iowa Law Professor Andy Grewal marshalled historical evidence (mainly from the 19th century) showing that the traditional understanding of ‘emoluments’ was limited to salary and other financial benefits attached to the holding of an office, and did not cover outside private business interests.” As Grewel observes, “market-rate transactions between the Trump Organization and foreign governments do not come within the clause.”

Grewel’s conclusions are echoed by University of Montana Law Professor Robert Natelson, author of The Original Constitution: What It Actually Said and Meant, who analyzed the legislative history of the Clause and its precursor in the Maryland Constitution. As Natelson notes, CREW’s interpretation of emoluments “would have eliminated Virginia tobacco planters like Thomas Jefferson or James Madison from ever being considered for the presidency.”

Some law professors say the Emoluments Clause may not even apply to Presidents, as opposed to appointed federal officials like diplomats.