I performed as the prosecutor in this pro bono outreach educational project in the form of a mock trial.  Stuart Daw, a local businessman, performed as the defendant. Mr. Daw has had several articles published that also appear on the website http://www.heritage-coffee.com   Mr. Daw still tries to explain philosophical and legal concepts as applied to business.


Guilty or not guilty?

Judge: Stuart Daw, you are charged with Moral Turpitude, doing work on behalf of the US government, knowing the laws under which you performed your work were immoral. How do you plead to this charge?

Me: Not guilty as charged, your Honor.

A few years ago, as founder and chairman of a philosophic society called the Tampa Bay Objectivists, I was often in search of a theme for monthly evening meetings, a theme that would entertain while giving members a chance to apply important philosophic principles to their everyday lives. An experience from my own past struck me as being a pretty good subject for review by this intelligent group of mostly young people, many of whom were in college preparing for life out there in the real world.

The incident in question had related to something I had done in the coffee business. Was it morally right, or was it morally wrong? I hadn’t really given it much thought, though I obviously must have felt it was okay at the time. It seemed to me that an interesting way to present the case to the group would be to hold a mock trial, with myself as the accused. As luck would have it, three of our club members were practicing lawyers. That meant we had a built-in judge, along with both a prosecution and defense attorney, with the other people serving as the jury. The “courtroom” was my office, jammed with around 25 members.

First, an outline of the alleged moral crime. I had acted for some time as an official coffee taster for the Customs Division of the US Treasury Department, identifying the country of origin of contraband coffee through blind cup testing. At the time, the US was a signatory to the International Coffee Organization quota system, in effect a cartel of governments, designed to fix coffee prices above their true market level.

Both importing and exporting nations could sign on, and most did. Coffee growing countries that did not were left with the problem of trying to sell their coffee to countries not in the Agreement. Or they might move their surplus to a country that had not been able to fill its quota, to be shipped under the name of that country (this became known as "tourist coffee"). Or they would dump it in places such as countries behind the old "Iron Curtain." One loophole was known as a "Basket Quota," under which an importing member could grant an amount of its purchases to a non-member that was in its good graces. An example of a country with a basket quota to export to the US was Mainland China, a non-signatory to the ICO Agreement, but which was held in particular favor and being wooed by the US Administration at the time.

Customs had seized two shipments from China on the West Coast, probably resulting from a tip. After the coffee had been impounded, the two luckless importers were obliged to sue the government to get the coffee released. Permission had apparently been granted to import the coffee by the US authorities, but in this case the problem was that there was more coffee in the seizure than was grown in China at the time. So if the coffee never came from China, where did it come from?

I received 42 samples of green coffee from Customs in San Francisco, flown in and hand delivered late at night by a PhD type who must have had a bit of jet lag. I met him, samples and all, at the airport, and after dropping him off at a hotel, headed for home with the samples in the trunk of the car. No sooner had I pulled into my driveway than a taxi came roaring down the street. Out jumped the Customs guy, demanding to know if I had opened the trunk of my car.

Luckily I had not. Apparently he had called local agents in Tampa from his hotel. They asked him if he had the samples in his possession. He hadn’t realized or had forgotten that it was crucial to “maintain the chain of custody,” never letting the samples out of his sight. So when they warned him that he may have ruined the case against the importers, he quickly came to rescue his treasure.

The next morning we met at my office. He would not tell me where the samples had originated. All 42 of them were numbered and otherwise unmarked. I cupped them “blind” with the Customs man standing close by. Five of the samples turned out to be of the robusta variety, the rest were arabicas. In a written report to Customs, I said that while it was impossible to be sure, the coffee was of a type and kind that I would expect to receive from Indonesia.

As it turned out the coffee had indeed come from Indonesia. It had been shipped to China and re-bagged with Chinese identification. An interesting part of the story was that after WWII the Indonesians had deported the Dutch and Chinese from what had been known as the Netherlands East Indies. The Chinese element resettled on the island of Hainan off the Southeast coast of China, taking slips from Indonesian coffee trees with them. Thus had begun an accelerated coffee culture in China, traditionally a tea-drinking nation.

The Trial

Space here precludes going through the actual subsequent pre-trial procedures and the final disposition of the case, which was strictly decided on the legal issues involved. But Let’s get back to the story of our philosophical society and the mock “trial.” Our group was closely knit intellectually and philosophically, for each member was a student of Objectivism, the philosophy of Ayn Rand. While their knowledge of Objectivism varied from one to the other, they all had at least a basic grasp of it and the meaning of the four main branches of philosophy -- Metaphysics (what is?), Epistemology (how do I know what is -- the theory of knowledge), Ethics (how should I behave?), and Politics (what is the proper form of social organization?).

We grasped the idea that all government laws should rest on some idea of proper ethics and morality in any society. A cartel such as the ICO coffee agreement would mean imprisonment if ordinary citizens attempted it. A good question to ask then would be: why should governments somehow exempt themselves from their own law and be able to get away with it?

The evening “trial” went well beyond our expectations. I thought it would be an easy win for me in working to enforce the law, but it turned out quite differently. While the proceedings were not recorded, here is a very brief summary of it after following the usual courtroom preliminaries:

Prosecutor: Do you believe cartels should be legalized?

Me: Yes. But more accurately, simply being ignored as not harmful except to those indulging in them.

Prosecutor: Don’t you believe that if companies were allowed to fix prices they would run wild and rip off the public with impunity?

Me: No, for competition would not allow it. The profit returns from inordinately high prices would also be high, and there are always competitors looking for places to invest capital in profitable enterprises. The result would be new entries into such a business, normalizing prices again. There’s no need for government involvement.

Prosecutor: Having admitted antitrust laws are wrong, why then did you agree to work for the government in prosecuting private citizens for breaking an immoral law?

Me: Because while I believed the law was wrong, I knew that coffee brought into the country well below market prices meant competitors of our company would have an unfair price advantage. Further, if a law is immoral but legal, one must realize that in breaking the law, one runs the risk of detection and punishment.

Prosecutor: In other words, you are a philosophic pragmatist. You were only concerned for your own company, and not that some of your fellow citizens could benefit from lower prices. That was selfish of you, Mr. Daw.

Defense Attorney: Objection Your Honor. He’s badgering the witness.

Judge: Overruled.

Me: A few people might benefit from lower prices with respect to that relatively small amount of coffee being smuggled into the country, but the rest of the populace would have to bear prices much higher than the market because of their own government meddling in the process.

Prosecutor: I don’t think we need further testimony from this man. He’s clearly guilty of breaking the moral law. He knows that the proper role of government in a free society excludes being involved in the field of economics, interfering with the individual rights, including property rights, of private citizens. By testifying for the State he knew he was going against his own conscience and sense of right or wrong.

My lawyer called a couple of “character witnesses” on my behalf, then took over the questioning: Mr. Daw, do we have a responsibility to help the poor farmers of the Third World get more for their products?

Me: This is a zero sum game, whereby some countries may get a short-term benefit from a government coffee cartel while others, not part of the cartel, are losing. Besides, raising prices above market levels of any agricultural product only encourages farmers to over-produce, creating a glut. Eventually the dam bursts, prices crash, impoverishing all the producers. That’s the natural law of the open marketplace.

Defense Attorney: You knew cartels were bad. Please tell the jury why, then, you witnessed for the government in the case of this seizure?

Me: The ruling principle here was justice. The law is wrong, and I admit it. But in the case of a bad law in a free society, the only moral course to follow for an individual citizen is to uphold the law, while working to have the bad law changed.

Those were the essence of the arguments before and against the defendant. The judge, attorneys and I left the room to allow the jury to come to a decision. To our surprise, it did not come quickly. It was perhaps a half-hour before we were called back to hear the verdict. The jury had taken this case very seriously.

The judge asked for the verdict, and the jury “foreman” stood and pronounced “not guilty.” The judge then polled the jury, and to my surprise I had won by only a couple of votes. But that was proof that we had found a really good issue to chew on. And we all had a lot of fun in the play.

It is appropriate to be serious and consider the principles involved in the above mock trial, in case either Canada or the US should ever think of re-entering the price fixing game of an international cartel. It would not be the moral thing for them to do. And remember, the moral is the practical. For whatever we may think of private efforts to raise prices through such things as Fair Trade, we must remember that these groups are strictly voluntary. Consumers are not obliged to pay more than the real market price for coffee if they choose not to. Coffee consumption is the ideal democratic process - people voting with their palates and their dollars for the best value we in the business can offer.