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To Alter or to AbolishChapter 36Hindsight is 20/20Written by Darrell Anderson. Those who cannot remember the past are condemned to repeat it. George Santayana, The Life of Reason Americans who advocate a political system model with representatives limited in political ability continually ask why the current system seems so different from “traditional intent.” What happened to the original plan for a limited political system? Evaluating history solely from a specific event is impossible. History is a continuing series-parallel sequence of events, all contributing in some respect to the current moment. Inspecting history through the lens of specific events is a static snapshot of a dynamic system. Such a reductionist approach invites errors. Attempting to link various events to prove conspiracies often is futile. The search for conspiracies often is little more than a search for patterns in human action. To understand the current political system, look backwards, and at the big picture. All past events have contributed to the current status, but several defining moments in American history mark the transitions through which those past continuing events are more easily recognized:
Those moments did not occur in a vacuum, as many events contributed to arrive at the current situation; these events merely punctuated existing ongoing transitions. These pivot points offer much to highlight the political climate and turmoil in America today. These transitions emphasize a continuing shift from agrarian regionalism and local influence to industrial nationalism and centralized control. The founding of the United States at the culmination of the Enlightenment period was a monumental event, familiar then and today to most people around the world. Americans attempted to practice the theories of scholars and intellectuals. The primary conflict between Americans and the British was about self-rule and self-determination. The Declaration of Independence shouted to the world the nature of the struggle: We hold these truths to be self evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. The Declaration was built upon two ideas: natural rights and popular sovereignty.[1] Yet, with independence secured the participants soon discovered the challenges of managing a growing industrial and commercial population, hence, motivation for some people to create a new Constitution. Whereas its predecessor — the Articles of Confederation — documented a horizontal confederated political society, the Constitution outlined a vertical consolidated centralized political system among the states. James Madison argued in Federalist No. 39 that the new political system contained both elements of nationalism and federalism. In hindsight his claims contain substance, but hindsight also proves him wrong. Alexis de Tocqueville, French author of Democracy in America, made the same observations in 1835. However, the Constitution, like its predecessor, theoretically retained states’ rights trumping central control.[2] The labels applied to the two general groups debating the ratification of the Constitution are misleading. The Federalists were in favor of a consolidated central political system and more correctly should be called Nationalists or Centralists. The Anti-Federalists were in favor of a straightforward confederation of states, and more correctly should be called Federalists or Confederalists.[3] Economic reform to support the huge energy needs of industrialism was a contributing motivator for the new document. Some individuals have argued that the entire independence movement was not so much an effort to secure liberty for all, but to protect those people already doing the exploiting.[4] A consolidated centralized political system was seen as a solution to resolve certain commerce concerns that had developed under the Articles of Confederation.[5] Among the alleged defects of the Articles, one goal was to provide political protections and improve the environment for American manufacturers and producers. Supposedly this defect manifested itself on the high seas with piracy as well as domestically. Quarrels between the people of the several states were not easily resolved, and congressional legislators’ inability to efficiently raise revenues impaired the ability to resolve issues and pay debts.[6] By far the bulk of those debts were obligations created from the war. The resulting desire to protect certain industries through political privilege would prove forevermore contentious as the young nation of people matured. The Constitution was written with compromises and, as with all philosophical compromises, something was lost.[7] Part of getting the document ratified was avoiding controversial issues. Through certain assumptions made by the Framers, this new document, which was expected to “bind” people together, contained several ambiguous problems.[8] Many of the participants of the Constitutional Convention foresaw the challenges. One of the more glaring compromises was the issue of human slavery. During the Constitutional Convention, some participants saw dangers ahead.[9] This compromise created two distinct and opposing societies. In achieving immediate fulfillment through political compromise, the seeds for long-term friction and faction were sown. Taxation was another area of compromise. Certain terms, adopted without clear definitions, planted additional seeds for later confusion and misinterpretation.[10] Almost from the beginning the vague necessary and proper,[11] general welfare,[12] commerce,[13] and supremacy[14] clauses provided much fodder for heated debate over the issue of federalism versus nationalism. Some of the people who opposed ratifying the Constitution originally raised concerns about these vague clauses.[15] From the very beginning Americans were splitting into distinctly opposing factions: loose and strict constructionists, implied versus reserved powers, nationalism versus regionalism.[16] The question never was so much about what implied powers the document contained, but the degree — should the document be interpreted loosely or strictly? That heated argument continues today.[17] Perhaps the most devastating problem was a lack of clear definitions and understanding about the concept of money. To this day this flaw haunts not only the American people, but the entire world. Through all of these compromises, opponents foresaw opportunities for mischief, faction, and exploitation — an ability to enslave other people. Compromises or not, the great American experiment continued. Through the basic principles of free association and voluntary exchange, a reasonably effective monetary currency system, and an abundance of land, Americans soon thrived as no people had prospered before. Despite the prosperity, struggles festered within the land, a fact acknowledged by many historians. The compromises were becoming huge sores. Slavery denied the words of the Declaration of Independence. Taxation in the nature of import duties and tariffs created economic imbalances between the northern manufacturing states and the southern agrarian states. Those same tariffs helped create monopolies and impair free trade. What was “necessary and proper” was continually debated. Regulating commerce continually infringed upon liberty of action and free trade. The debate over federalism versus nationalism and the conflict between national “supremacy” and states’ rights caused much contention. All of these initial compromises contributed eventually to domestic war. Many people denounce the War Among the States as unnecessary. The huge demand for energy resources required by industrialism gave rise to the almost inevitable clashes between agrarian and industrial pursuits.[18] The primary issues remained the same as in the American War for Independence — self-rule and self-determination. Although typically called the American Revolutionary War, that struggle was more of a secessionist movement rather than an effort to overthrow the British political system.[19] Unfortunately, the second secessionist war quashed those issues.[20] Indeed, Jeffrey Rogers Hummel, in his epilogue to Emancipating Slaves, Enslaving Free Men,[21] shrewdly summarized the effects, noting that the war “. . . represents the simultaneous culmination and repudiation of the American Revolution.”[22] Whereas the American War for Independence is more correctly observed as a secessionist movement, the War Among the States is more correctly observed as a struggle between the philosophy of federation and a consolidated, centralized, totalitarian philosophy of political power. Or, as Rose Wilder Lane observed, “Northerners fought to save the American Revolution by saving the Union. Southerners fought to save the Revolution by defending the rights of the States.”[23] Consider those statements. The struggle was between regionalism and nationalism. Regionalism is a collective acknowledgement that there cannot be one uniform mode of thinking or philosophy, and peacefully allows for differences. Nationalism opposes that approach and embraces a one-size-fits-all definition of happiness. Individuals in the southern coalition of states claimed the right to self-determination and the right to secede. Individuals in the northern coalition denied those fundamental beliefs. Neither side had much respect for native Indians.[24] The divisive economic issue of tariffs greatly exasperated the situation.[25] Well known to any student of history, many southern people denied black people liberty and the personal right to self-determination and self-rule. Less known is that northern individuals treated blacks little better, with numerous statutes greatly affecting the liberties of blacks. Many non-slave state legislators had enacted various statutes restricting the rights of blacks. In some states, such as Indiana, blacks were prohibited from being in the state. Others, such as Illinois, prohibited free travel. Furthermore, because many people in northern states received windfall profits from various regulation and tariff schemes that transferred wealth from the south to the north, northerners were indirectly sanctioning the economic benefits of slavery. Indeed, the Fugitive Slave Acts of 1797 and 1850 indirectly endorsed the “peculiar institution.” Although many northerners disfavored slavery, those same people did not want blacks living in their neighborhoods. That is a significant reason why the Underground Railroad ended in Canada and not northern states. Blacks simply were not welcome in many northern areas.[26] People in the industrialized northern states pushed for centralism, while people in the agrarian southern states fought to retain federalism. From another perspective northerners were fighting to maintain humans as political slaves, southerners to possess humans as chattel slaves.[27] Both sides in the squabble rendered meaningless the words “all men are created equal,” “consent of the governed,” and “the Right of the People to alter or to abolish.” The results of that bloody conflict eventually changed the way Americans looked upon themselves. Industrial interests triumphed. As witnessed by the war, through the new Constitution the shift toward nationalism was already in progress, but through that war regionalism surrendered another step toward nationalism. The issue of nationalism was discussed during ratification of the Constitution,[28] was emphasized by some men such as Joseph Story and Daniel Webster, and many of the John Marshall Supreme Court decisions addressed and favored nationalism. Throughout the Marshall era many nationalism/centralism doors were opened, although the effects of his court’s decisions were not always felt immediately.[29] Indeed, the writers of the Constitution attempted to create a centralized national political system. During the Constitutional Convention James Madison sought national veto power over state legislation.[30] Nonetheless, although in both the northern and southern regions states’ rights sentiments remained strong for several decades after the war.[31] The War Among the States and the interpreted emphasis on the constitutional supremacy clause continued the shift toward industrialism, nationalism, and a centralized political system. Violent preservation of the national political system trumped state and individual interests and rights. During that conflict foundations were laid for a national currency and a national banking system,[32] further reinforcing nationalist thinking. Those acts effectively ended localized currencies, thereby providing the national legislators and the moneyed elite a monopoly on the currency. A result of the war was that within two generations Americans saw themselves as Americans, not as natives of Virginia or Massachusetts. Some people might argue that the seeds were planted much earlier. Consider Patrick Henry’s statement that “The distinctions between Virginians, Pennsylvanians, New Yorkers, and New Englanders are no more. I am not a Virginian, but an American.” The constitutional ratification debates indicate that people still thought themselves foremost as political citizens of a state, and the nation second. Henry’s declaration must read in context, emphasizing a cultural perspective and not a political perspective. He was distinguishing between Americans and British cultures. Whether consciously or subconsciously, through the 14th Amendment Americans in subsequent years would soon see themselves as national citizens first, regional citizens second. Today there is much debate whether the 14th Amendment was ever properly ratified. In effect, the 14th destroyed the regionalism acknowledged by the 9th and 10th Amendments. In short, Americans were changing the way they thought about themselves. The new direction was national chauvinism[33], a direction that became noticeable in the 1890s, beginning with the Spanish-American war.[34] Several subsequent movements would arise with this shift toward nationalism to pave the way for future transitions. Although many clauses of the Constitution intimated implied powers and the Marshall Court was willing to embrace such thinking, in the aftermath of the War Among the States the Supreme Court judges more openly adopted the Constitution as a document of inherent and implied powers, not necessarily a charter of limited powers.[35] Initially the Supreme Court judges narrowly rejected a broad application of the new 14th Amendment,[36] but slowly the judges accepted the words as written and began to strengthen individual rights and the right to property and contract, not just applying the amendment to ex-slaves. Previously, the original national bill of rights was seen as applying restraints only upon the national confederation,[37] more or less recognizing the federal concept of the union; but through cases such as Hurtado v. California,[38] Allgeyer v. Louisiana,[39] and Patterson v. Colorado,[40] the Court judges began exploring whether the 14th Amendment selectively incorporated the original national bill of rights, and whether the 14th could restrain state legislators. This perspective is known as the Incorporation Doctrine, whereby the 14th Amendment incorporates the federal bill of rights to apply at the state level. Such discussions further strengthened national identity over state identity, and further weakened the federal concept. Additionally, through this newfound avenue of “due process” an entire body of law was developed to open the doors to the administrative bureaucracy.[41] Due process is a meticulous adherence to substantive and procedural protections. Although mentioned in the Fifth Amendment, the 14th Amendment’s due process clause provided more focus to the concept. The Gilded Age of the late 19th century witnessed various reform movements to counter the effects of rapid industrialization and expansion. The reform efforts manifested themselves largely in the Populist and Progressive movements. The Populists struggled to preserve a rural and agrarian mindset; the Progressives sought to quash political graft, corruption, bosses, unfair legislation, monopoly, trusts, and “big business.” Affecting those efforts were the socialism and communism efforts of the Marxists and socialists. Mixed within these movements was the flawed idea of social adaptation of Darwin’s evolution of species theories — claiming that societies and governments “evolve,”[42] and that successful businesses “survived” merely because they were “the fittest.”[43] People within those movements believed they saw within the process of politicized capitalism many opportunities for oppression, control, and monopoly. There was a push for regulating resources and property.[44] The main cause of such imbalances was not capitalism — the straightforward process of using capital to produce additional wealth, but a spectacular rise of industrialism such as the world had never seen, combined with the politicization of free association and voluntary exchange. People simply could not keep pace with the changes — nor did they know how — thereby causing tremendous shifts in social structures.[45] The true root cause of the unrest and discontent was not capitalization but ignorance. Using the 14th Amendment and the doctrines of economic laissez-faire and economic due process,[46] judicial decisions made by the Supreme Court judges, such as in Lochner v. New York,[47] Adair v. United States,[48] and Coppage v. Kansas,[49] protecting rights and contracts, momentarily frustrated those movements, and the populist political atmosphere eventually resisted in an attempt to overturn those decisions. Individual rights and liberties were somewhat strengthened by such decisions and these decisions made sense for the period. Many of the judges of that time had lived through the repercussions of the War Among the States, Reconstruction, and the aftermath of the 13th, 14th, and 15th Amendments. Slavery was taboo, and almost anything suggesting such a similar relationship was resisted. Such cases emphasized personal liberty over progressivism, discouraging efforts of monopoly and unionism.[50] The central thought was certainly Lockean in that ownership of property began with ownership of selves,[51] a concept arguably embedded in the Constitution. During this period a subtle shift resulted from changes in farming. Through innovations in technology, family and subsistence farming — historically an individual pursuit — became a growing commercial activity. Agribusiness is and almost always has been funded through debt — investing in improved but costly technology and secured by mortgages. Instantaneous capitalization through modern banking enabled that process. Farming is a unique industry greatly dependent upon nature. When nature lends a hand farming can be a lucrative enterprise. Without nature’s help financial burdens can become overwhelming under the current system. A dependency upon credit for the lean years became commonplace for both family farmers and agribusiness, fueling their desire for easy credit. Interestingly, a parallel challenge arose with farming. Due to work ethic, inexpensive land, and improved technology, American farmers became productive and more efficient. Commercial farmers tended to buy large tracts of land, and with improved technology produced more crops than could be purchased in the market by consumers. The challenges of overproduction impacted farming just as much as the industrial sector. Supply versus demand is a fundamental property of human action, and farmers were soon faced with lowering prices.[52] Confronted with debts, reduced revenues, and the occasional interruptions of nature, farmers felt the hostility of creditors. Farmers placed the blame on high mortgages, high railroad freight rates, and granary storage rates. Except for short-run lines, these claims probably were not inclusively true; most freight rates steadily dropped during the last half of the nineteenth century.[53] Not realizing that the primary cause of their challenges was the manner in which they created debt through political privilege and compound interest, and rather than adjust production output and expenses to stabilize prices or find new markets, many farmers instead began pushing for political protection to sustain their own energy flows. Thus began the Grange movement to fight “eastern capitalists.”[54] Not that the farmers’ claims were baseless; many elements contributed to the confusion: such as protective tariffs; land and business speculators; limited choices of suppliers of tools and machinery; the rapid pace of industrialism; after being purchased from farmers at a lower grade, grain “mysteriously” improved market grade before being sold to consumers; a slowly deflating currency, and a widespread confusion about wealth and currency, all contributed to periodic recessionary business cycles. Underlying all of this confusion was the malevolence of compound interest. Although commercial agriculture was a key in the push for easier credit and “cheap money,” individuals in that industry were not alone in voicing their concerns. Rapid industrialization initiated numerous improvements in technology and the ability to provide more goods at lower costs. However, the cost of capitalizing such businesses rose with the need for the new tools, equipment, and resources that enabled mass production. As industrialism increased, so did debt loads and the division of labor, accelerating the need for a dependable circulating currency. Currency had played a social role for a several hundred years, but never to such vexing levels. Ignorance again raised its head — nobody really knew how to stabilize a large-scale monetary system with such overwhelming and rapid growth. Creditors certainly wanted a stable monetary system to preserve the value of their loans and investments while investors and debtors clamored for an increase in the money supply, prompted not only by the desire for more paper currency, but by the discovery of large silver deposits and the Populist movement to reintroduce silver into circulation as currency. The withdrawal from circulation of silver coin roughly coincided with the discovery of silver deposits in Nevada, prompting numerous accusations of political manipulation and conspiracy. The railroad builders were key players in the industrial movement. Railroad company owners were empowered and subsidized by congressional legislators, acquiring monopoly power in many areas of the nation. They obtained huge land grant subsidies as incentive to build railroads, thereby helping to create an artificial scarcity of arable land. Sadly, despite certain social benefits, the history of the railroads is not a clean story. The railroads are a classic example of good intentions going bad. Perceived as being one of the contributors to economic woes, the Grange movement and dependant merchants pushed for regulating the railroads and granaries. Both the railroads and the Grange movements did much to nationalize the thinking of people. Eventually such related industries and property were “nationalized” through regulation because those industries affected the “public interest.”[55] The extent of that regulation fluctuated through the next few decades but the seeds were planted, and eventually would dramatically affect all forms of property.[56] The telegraph and telephone expanded the ability to communicate, thereby further expanding a national and collective sense of identity. Similarly, the later emergence of large steam-powered shipping, the automobile, airplane, and radio industries did likewise. The transition from regional to national identity coupled with the change from an agrarian to an industrialized culture saw the rule of law and basic property rights being challenged by protectionism. The change discerned itself with events such as the anti-trust acts, the push for an income tax, an increasing desire for an elastic currency, and the creation of the Interstate Commerce Commission (ICC). Administrative bureaucracies already existed nationally and in the many states. The ICC was only a watershed moment to nationalize regulatory thinking. The push for an income tax was seen as a class struggle to redistribute wealth in a growing industrialized nation. Regulation grew along with protectionism, and with regulation, fiat statutory law rapidly began to displace everyday common and customary law.[57] As the tension grew between economic liberty and the philosophies of protectionism and political socialism, a compromising legal doctrine emerged recognizing personal liberties but acknowledging regulation. That doctrine effectively killed the fundamental recognition that property could not be taken without consent and compensation.[58] Through technical legalese, regulation was not a “taking,” and the concept of property became a secondary issue. People within the social movements pushed for populism. Increasingly, many individuals argued for more popular and democratic control of the political system. Ideas such as ballot initiatives and referendums soon found their way into state constitutions. Popular control of elections created the 17th Amendment, allowing popular election of national senators. Populism brought about voting privileges for women (19th Amendment), witnessed efforts to control social behavior (18th Amendment — Prohibition), and sought coerced wealth redistribution and business regulation (16th Amendment — income tax). Interestingly, the Progressive era partially achieved the opposite effect of what many people had desired. Industrialization required huge amounts of capitalization and the legal fiction known as the corporation became status quo in America.[59] There can be little debate that the concept of incorporating primarily serves the unique purpose of providing political protective shields under the color of law. “A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law.”[60] With the rise of industrialization, many individuals saw large corporations as tools of iniquity. Thus, many individuals pushed for regulation and trust-busting of “big business.” Eliminating competition is one way to guarantee profits. Initially “big business” sought to eliminate competition through mergers and trusts.[61] The “invisible hand” of the market resisted such efforts, and the more “big business” owners tried to monopolize through trusts and mergers, the more profits decreased. The market proved defiant, competition increased, and consumers benefited.[62] Many large business owners then realized that political regulation actually would help their cause. Through regulation, politically created monopolies or pseudo-monopolies could be established, thereby eliminating or reducing the effects of competition. Legislation could be written to provide unique privileges. Political regulation typically is cost prohibitive to small and new businesses. As with most things within the limited context of statism, the trade-off would be that profits would be regulated and somewhat reduced but virtually guaranteed.[63] Business owners would incorporate their businesses, becoming “creatures of the state,” and submitting to regulation — in exchange for almost guaranteed profits. Therefore, in the long run, regulation was embraced, not only by the Progressives, but also by “big business” itself.[64] Big business and the political system became bedfellows, and the slow death of the community merchant and common law began. The year 1913 witnessed the introduction of the Federal Reserve Act and ratification of the 16th Amendment and 17th Amendments. Many individuals argue that the concurrency of these changes all in one year are no coincidence, greatly implying conspiracy or nefarious deeds. “Nefarious” thinking is plausible, but concurrency of the acts was indeed coincidental. The 16th Amendment was originally proposed to the state legislatures in 1909 and monetary reform was a heated topic for several decades. Furthermore, the 16th Amendment had roots at least as far back as 1894 and arguably back to the income tax imposed during the War Among the States. The Progressive movement was rolling along at full steam by the time the 17th Amendment was ratified. Thus, several such acts in one year are eyebrow raising, but that is all. The Federal Reserve Act[65] created a centralized national banking system and currency through the Federal Reserve System. The Act created a central banking system through 12 regional private banks owned by participating commercial banks. All national banks were required to join the system and buy non-performing stock. State banks could join if desired. That system was a legislative response to answer calls for a more elastic currency, addressing some of the concerns of a growing industrialized nation.[66] Industrialization requires huge amounts of capital, and instantaneous “elastic” currency creation through political privilege provides an opportunity to create that capital. Unfortunately, that elasticity manifested itself largely through currency creation and inflation, often backed by no wealth. The Federal Reserve Act granted control of the national currency to a quasi-private, quasi-public cartel of bankers. Many business people were becoming so successful that they were capitalizing expansion from their own profits rather than through bank loans. The finance sector was losing its influence and the banking market was shrinking. Like the big business owners who decided to accept regulation as a means of guaranteed profits, bankers wanted something similar.[67] By creating a central banking mechanism, an indirect monopoly was essentially granted to the wealthy elite involved in banking. Legislative regulation ensured the monopoly. At the topmost federal level the individuals within this organization could create currency out of debt imposed on future generations of Americans. The huge time delay of repaying that debt had the short-term effect of reducing the exchange value of the currency because an equivalent offsetting value in goods and services was not immediately, if ever, produced. Long-term, the debt is never paid, just increased, giving rise to never-ending currency inflation and “death by a thousand cuts.” Worse, through the new “Fed” and with new income tax laws to raise revenues, congressional legislators redirected and captured for its own desires an ever-larger share of the nation’s increasing prosperity. The 16th Amendment opened doors to ignore the constitutional rule of apportionment with respect to collecting taxes on the property of incomes. The 17th Amendment further eroded state boundaries and both Amendments damaged much of the remnants of the confederation concept. In that same year, a proposal for the forerunner of the Federal Rules of Civil Procedure saw the merger of law (statutes) and equity (customary law and reason) into one action known as a “civil action,”[68] thereby jumbling the ability to discern appropriate jurisdiction and the nature and cause of an action. In some regions in America as far back as the 18th century, more than likely because of remote geographical areas, law and equity never were formally distinguished procedurally. Law and equity were still separate actions, but no venue and procedural distinction was made in many American courts as had been done in England. The American movement to codify all court procedure goes back in earnest to 1848 with David Dudley Field.[69] Regardless, that seemingly simple marriage suppressed customary law, and clouded the distinctions between fundamental rights and statutory “public” law. Suddenly, few people could discern whether a law was customary, private, or public. Fiat statutory law would soon rule the day. Wars always have a way of redirecting history. In the 1890s, after recognizing that Southern Reconstruction had largely failed to provide themselves the political influence they had sought, the Republican Party oligarchy began looking for new ways to entrench themselves into the American political system.[70] A new desire to expand foreign policy developed, a policy that was alien to the American philosophy of non-interventionism and neutrality. As politicians agitated various world events, Americans soon found themselves embroiled in a war outside established political boundaries. Through the Spanish-American War of 1898 American politicians suddenly found themselves intervening in global affairs. The foundations for the political-military-industrial complex were established. Similarly, politicians within the national political system used their new-found fiscal and monetary powers to finance World War I.[71] America’s participation in that war conclusively ended a policy of non-interventionism and neutrality, and opened doors overseas to further expand nationalistic and imperialistic thinking. Whether right or wrong, wars have a tendency to increase a sense of nationalism and collective identity; and certainly tends to increase the power of politicians. The majority of Americans did not want war and saw no reason to get involved in the European turmoil 3,000 miles away. America nonetheless entered World War I through political deception and manipulations.[72] With the declaration of war on April 6, 1917 and the resulting political war fever, American politicians quickly began ignoring fundamental rights that identified and defined America. To control and censor information and regulate propaganda about the war, Woodrow Wilson created the Committee on Public Information. In 1917 congressional legislators enacted the Espionage Act[73] and Selective Service Act;[74] and in 1918 the Sedition Act.[75] People who voiced concerns or objections to the war, military institutions, or the flag were convicted and imprisoned.[76] Even historical movies did not escape. Robert Goldstein was sentenced to ten years in prison for his movie, Spirit of ‘76, depicting the British as enemies to colonial America — who happened to be political allies in World War I. Just as in the days of Lincoln, those who rejected the concept of military conscription met the same fate.[77] The Post Office became an instrument of censorship and terror.[78] Loyalty oaths and committees became popular throughout the land. Vigilante groups were condoned. Arguing in favor of increased taxation instead of war bonds was a convictable offense.[79] The German language was all but forbidden to be spoken or taught. Anything advocating dissent was considered disloyalty and a statutory crime. During that period freedom of speech became a footnote in American history, and arguably, Americans never fully recovered. One thing became clear from the war effort, however, was that big business and politics easily could thrive together.[80] At the end of World War I, Americans experienced a short-term inflationary period and then a short-term economic depression and contraction.[81] The exchange power of the currency recovered from that period; and combined with tax reductions, the Federal Reserve Board governors helped produce high economic times leading to the “Roaring Twenties.”[82] Few individuals then fully understood the Federal Reserve System’s new powers. Changes in monetary policies at the end of the decade deflated the currency and plunged the nation into an economic depression. Not understanding the power and impact of open market operations probably caused an increase in bank reserves and lowered interest rates, thereby encouraging more loans.[83] Speculation in the market induced many problems as bankers loaned funds solely to investors rather than people producing actual wealth. When the contraction began bankers had to adjust their books when borrowers defaulted. In addition to the contraction caused by the Federal Reserve Board governors, those adjustments contributed to the currency deflation. Although the governors might have somewhat dampened the effects of the collapse by expanding or loosening credit, they had much to do with causing the trouble in the first place by not discouraging the rampant speculative atmosphere.[84] The problem was not a lack of production or unwillingness to work and produce, but simply insufficient currency in circulation to exchange goods and services and sustain the production and consumption process. That was the very problem the Fed was created to avoid. By the end of the decade, a large domestic tax increase and higher international tariffs combined psychologically with a major stock market crash further confused Americans.[85] The Federal Reserve board of Governors increased the discount rate, further reducing the amount of currency in circulation. Whether by political intent or accident the Great Depression devastated people economically and emotionally,[86] setting the stage for another major transition. Franklin Delano Roosevelt’s presidential election victory in 1932, along with the 1934 congressional elections and the 1936 landslide victory, revived a policy vigorously exercised today. Because of lopsided voter support, Roosevelt claimed that “the people had spoken,” providing him a mandate to act based upon his political campaign promises. That mandate “philosophy” had always existed, but never had been so convincing. That philosophy existed in the mid 1800s with the shift from state-centered thinking to nationalism,[87] and the seeds for such thinking were sown in the populist elections of both Thomas Jefferson and Andrew Jackson. Today this mandate philosophy continues with presidential elections with the president arguably being a spokesman for a national majority and a national legislative leader.[88] Immediately Roosevelt began implementing his pledges. Roosevelt did not always introduce new ideas, but often merely converged and experimented with previous ideas.[89] For his entire first term and more than a year into his second, he met strong resistance from the Supreme Court judges who declared many of his efforts unconstitutional.[90] Half of this Court was filled with supporters of laissez-faire, conservative interpretations of the Constitution, and “economic” due process. Roosevelt then attempted to pack the Court with like-minded New Deal Democrat judges. Although congressional legislators never enacted this political ploy, the Court judges finally “got the message” and began to “see” the Constitution in a new light. That is, no longer a document limiting the powers of the political system but wholly as an expansive document of implied powers.[91] This transition or “switch in time that saved nine” was not necessarily a “sell-out” response, but more of a response by the Court judges in accepting the idea that “the people had spoken.” A retirement from the bench and subsequent replacement with a New Deal believer certainly helped the transition. Roosevelt won the 1936 election by a landslide. Some individuals argue that the Court judges changed their ways because of the political process.[92] Some individuals believe that the second wave of legislation succeeded because of investigating why the original efforts failed before the Court judges — thus, the second legislative efforts were written to better withstand judicial analysis. However, public political pressures were rising to both enact New Deal legislation and reduce the impact judges had on legislation. Additionally, there was the background “threat” of Roosevelt’s court packing plan. The Tenth Amendment offered little constraint against national legislation and thinking. The Progressive movement idea of providing substantive due process protection for many business owners was losing public appeal. More regularly court judges and many people simply assumed that all legislation always was constitutional.[93] Therefore, more reasonably, the “switch in time that save nine” resulted from a combination of several factors. In Erie R.R. Co. v. Tompkins,[94] the Court judges further “adjusted” their thinking by declaring that federal court judges could not create federal common law without first examining state statutes, regulations, and state common law. That is, federal common law decisions were to be based upon local law. Contrary to many incorrect beliefs, the Erie decision did not eliminate federal common law but only required close inspection of state statutes, regulations, and common law before formulating federal common law. Indeed, on the same day the Erie opinion was issued, in a dispute about water rights to the La Plata River that flowed in both Colorado and New Mexico, the Supreme Court judges based their decision upon federal common law.[95] Although a correct decision with respect to the concept of federalism, the Erie decision effectively sealed the doors on the laissez-faire Lochnerian era of property and contract. Gone was the doctrine of Swift v. Tyson[96] that “enabled” federal court judges to bypass local rulings and resolve many disputes upon the common law basis of torts, contracts, and property.[97] Local customary and common law would no longer impede statutory and regulatory administrative processes. Although the bureaucratic administrative system was relatively new in America, such legal processes had already existed in Europe for more than 100 years, gaining fast momentum after the French revolution and consolidation of Germanic states. The roots of the administrative system are in Roman civil law. The American political system, arguably based upon natural law, only prolonged and curtailed the arrival of the administrative beast. To add salt to the wounds of free association and voluntary exchange, the Court judges somehow determined that economic property rights were different and distinct from personal liberties, as though there ever could be a difference.[98] With that shift in the wind, court judges could uphold legislative policy and administrative regulation over considerations of economic rights and liberties.[99] Because the new mandate focused the political system on the “health, safety, and welfare” of everybody, protecting rights, property, and contracts became secondary issues. National and state regulatory power became king. By the early 1940s, several subsequent Supreme Court decisions,[100] along with World War II, effectively ended the discussion. These self-imposed restraints effectively ended any hopes for theoretical “checks and balances.”[101] Laissez-faire, autonomy through local customs, regionalism, and fundamental property rights were dead. What many people did not understand is that they provided the rope for their own hanging. An especially noteworthy example is Wickard v. Filburn.[102] Congressional legislators enacted The Agricultural Adjustment Act of 1938 to regulate the wheat production of farmers. In short, farmers were told how much wheat they could grow — even if they grew crops only for their own purposes and did not sell across state lines. Excess production was penalized. Suddenly the New Deal administrative system knew no boundaries. This court decision was decided unanimously 9 to 0. Many individuals fail to grasp the underlying lesson of the case. When politicians and bureaucrats subsidize and provide benefits, and people voluntarily accept those conditions, the politicians and bureaucrats can and do regulate. In the unanimous opinion, Justice Jackson wrote, “It is hardly lack of due process for the Government to regulate that which it subsidizes.” Any individual who seeks or accepts benefits and then expects not to pay and not to be regulated is fooling nobody. If you want something for nothing, expect to be controlled in order to receive those benefits. Involuntary servitude might be forbidden, but voluntary servitude certainly is not. One foot in and you’re in. The floodgates were opened and the political system was no longer seen as a limited entity. Statutory dictatorial law reigned supreme over common law.[103] Through broad interpretations of the Constitution’s commerce and necessary and proper clauses, as well as applying a never-ending expansive meaning to the general welfare clauses, the entire political system soon became the Leviathan the Anti-Federalists feared as fundamental rights were continually redefined externally. Many original Anti-Federalists predicted court judges eventually would abuse those clauses and act as ad hoc legislators. Such reinterpretations, punctuated by the Supreme Court judges’ eagerness to legislate through their opinions,[104] along with the spirit of centralism and nationalism, all but killed the Ninth and Tenth Amendment. Regionalism effectively was dead. With World War II, taxation again reared its ugly head as a cause for confusion. With the Victory Tax of 1942 and the Current Tax Payment Act of 1943, Americans were reintroduced en masse to withholding wages and income at the source, and soon after the war congressional legislators were redistributing wealth as never before. Withholding at the source was not a new idea, having been used and tried before in the United States in 1862, 1894, 1913 and the taxes imposed by the Social Security Act of 1935. Withholding had roots in Britain as far back as 1803.[105] The problem with the 1942 and 1943 acts was the distinction between wages and income were forever clouded.[106] More importantly, narrowly defined statutory applications of these words and phrases were routinely confused with common street usage. Just as before, the old debates would rise about the nature of the income tax — whether the tax is a direct or indirect tax and what exactly is income. The expansive powers of the political system also were seen to provide an unlimited power to tax, further eroding property rights that were now easily confiscated through taxation.[107] As Leviathan grew beyond any expected or conceived proportions, the great fear of the Anti-Federalists — standing armies — manifested itself in a form never imagined — administrative agency police forces. Today, “alphabet-soup gangs” terrorize people across the land. Contrary to the Framers’ expectations, many people embraced this new Big Brother. A social welfare state of legal plunder and coerced wealth redistribution became the norm. Nobody in the political machinery worried about taking property from citizens without compensation, they merely regulated or taxed the property to death. Consider how these cumulative events affected Americans. First came a transition from being ruled by other people to self-rule. Next, local identity became national identity as regionalism gave way to centralism and industrialism. The movement from protecting boundaries shifted to promoting the “public’s” health, safety, and welfare as freedom of association and voluntary exchange gave way to regulation and Big Brother. Fascism, politicized democracy, and politicized socialism replaced constitutionalism. Two world wars and several military conflicts and actions solidified the philosophy of statism. Populism manifested itself through democratic (mob) rule, effectively placing Americans right back to where they started: being ruled by other people. John Acton once stated, “The one pervading evil of democracy is the tyranny of the majority, or rather of that party, not always the majority, that succeeds, by force or fraud, in carrying elections.”[108] More than 100 years prior, James Madison voiced his same concerns about factions in Federalist Paper No. 10. Today, almost everybody struggles to use the political system to extend their worldviews and sustain energy flows by trying to create virtual perpetual motion through the captured labor of other people. Finis. Next: Chapter 37 — Lessons Learned Endnotes [1] Nock, Our Enemy The State, pp. 74–75. [2] Ninth and Tenth Amendments, The Federalist Papers. [3] Kammen, A Machine That Would Go Of Itself, p. 319. [4] Nock, Our Enemy The State, pp. 72–74 — Kammen, A Machine That Would Go Of Itself, p. 21 — Beard, An Economic Interpretation of the Constitution of the United States. [5] Ely, The Guardian of Every Other Right, p. 49. [6] The Anti-Federalist Papers and Constitutional Convention Debates, p. 36. [7] Livingston and Thompson, The Consent of the Governed, p. 142. [8] Kammen, A Machine That Would Go Of Itself, pp. 5–6. [9] For example, refer to Hummel, Emancipating Slaves, Enslaving Free Men; Rakove, Original Meanings, Politics and Ideas in the Making of the Constitution. [10] Kammen, A Machine That Would Go Of Itself, p. 5. [11] Article I, § 8, cl. 18. [12] Preamble and Article I, § 8, cl. 1. [13] Article I, § 8, cl. 3. [14] Article IV, § 2. [15] For example, refer to Anti-Federalist Letter 1 written by “Brutus.” Additionally, read court case opinions such as McCulloch v. Maryland, 17 U.S. (4 Wheaton) 316 (1819), which addressed the ambiguous issue of whether congressional legislators possessed standing to create a national bank, and whether state legislators could tax a nationally chartered corporation. [16] Kammen, A Machine That Would Go Of Itself, p. 30. [17] For example, see Antonin Scalia, A Matter of Interpretation. [18] Toffler, The Third Wave, pp. 23–24. [19] The Revolutionary War was not solely a secessionist movement. Primarily the War was an ideological movement. For example, see Bernard Bailyn, The Ideological Origins of the American Revolution; Gordon S. Wood, The Radicalism of the American Revolution. [20] Notice the word quashed, not settled or ended. [21] Hummel, p. 349. [22] Albert Jay Nock argued that repudiation occurred not 84 years later, but only 11 — with the ratification of the Constitution — Nock, Our Enemy The State, p. 94. [23] Lane, The Discovery of Freedom, p. 64. [24] Weinberg, “A Short History of American Capitalism,” pp. 13–25. [25] Refer to Adams, When in the Course of Human Events, in toto. [26] Refer to Hummel, Emancipating Slaves, Enslaving Free Men; Adams, When in the Course of Human Events. [27] Spooner, The Lysander Spooner Reader, “No Treason No. II,” p. 75. [28] Refer to The Federalist Papers No. 39, and various Anti-Federalist responses. [29] For example, read Marbury v. Madison, 5 U.S. (Cranch) 137 (1803), Fletcher v. Peck, 10 U.S. (6 Cranch) 87 (1810), McCulloch v. Maryland, 17 U.S. (4 Wheaton) 316 (1819), Cohens v. Virginia, 19 U.S. (6 Wheaton) 264 (1821), Gibbons v. Ogden, 22 U.S. (Wheaton) 1 (1824). [30] Rakove, Original Meanings, p. 14, 51–53. [31] Kammen, A Machine That Would Go Of Itself, p. 95. [32] Currency and banking acts of 1862 — 1865. Some of these acts were subsequently contested in the Legal Tender Cases, 79 U.S. (12 Wall.) 457 (1871), but the acts eventually were upheld. [33] Kammen, A Machine That Would Go Of Itself, p. 22. [34] Refer to Karp, The Politics of War, in toto. [35] For example, read the Legal Tender Cases, 79 U.S. (12 Wall.) 457 (1871), which sanctioned the creation of a national currency; Veazie Bank v. Fenno, 75 U.S. 533 (1869) which endorsed a tax on local currencies; or Springer v. United States, 102 U.S. 586 (1880), which sanctioned an income tax. [36] Read the Slaughter-House Cases 83 U.S. 36 (1872). [37] Read Barron v. Baltimore, 32 U.S. (7 Pet.) 243 (1833). [38] 110 U.S. 516 (1884). [39] 165 U.S. 578 (1897). [40] 205 U.S. 454 (1907). [41] Hayek, The Constitution of Liberty, p. 189. [42] Kammen, A Machine That Would Go Of Itself, p. 19. [43] Toffler, The Third Wave, p. 101. [44] Ely, The Guardian of Every Other Right, p. 8. [45] Soddy, Wealth, Virtual wealth and Debt, p. 152. [46] Kammen, A Machine That Would Go Of Itself, p. 7. [47] 198 U.S. 45 (1905). Liberty-minded individuals should not get smug with Lochner — read Justice Harlan’s dissenting opinion. Then read Muller v. Oregon, 208 U.S. 412 (1908), decided only three years later. To paraphrase from a well known story, “All people are equal before the law, only some people are more equal.” [48] 208 U.S. 161 (1908). [49] 236 U.S. 1 (1915). [50] Livingston and Thompson, The Consent of the Governed, p. 182. [51] Arkes, “On the Structure of Privacy: Adair and Coppage Revisited.” [52] Greider, Secrets of the Temple, pp. 245–251. [53] Hofstadter, The Age of Reform, p. 58, footnote 3. Also, Friedman, The Machinery of Freedom, pp. 52–53, citing Gabriel Kolko, Railroads and Regulation. [54] Johnson, The United States Since 1865, pp. 162–164, 205. [55] Read the Granger cases, such as Munn v. Illinois, 94 U.S. 113 (1876), Peik v. the Chicago and Northwestern Railroad, 94 U.S. 164 (1876). [56] For example, read Euclid v. Ambler Realty Co., 272 U.S. 365 (1926), Village of Belle Terre v. Boraas, 416 U.S. 1 (1974), or Agins v. City of Tiburon, 447 U.S. 255 (1980); all sanctioning zoning and land use laws. [57] Howard, The Death of Common Sense, p. 24. [58] Epstein, Takings, pp. 93–104. [59] Toffler, The Third Wave, pp. 30–31. [60] Dartmouth College v. Woodward, 17 U.S. 518 (1819). [61] Weinberg, “A Short History of American Capitalism,” pp. 138–160. [62] Hoppe, A Theory of Socialism and Capitalism, p. 178, and Friedman, The Machinery of Freedom, pp. 39–40, citing Gabriel Kolko, The Triumph of Conservatism, Chicago, 1967. [63] Thurow, The Zero-Sum Society, p. 128. [64] Rothbard, “Left and Right: The Prospects for Liberty,” pp. 13–14, citing Gabriel Kolko, The Triumph of Conservatism, Chicago, 1967. [65] United States Statutes at Large, Volume 38, Chapter 6, (pp. 251ff). The original act has been amended many times. [66] Johnson, Historical Beginnings, p. 15. [67] Greider, Secrets of the Temple, pp. 274–275; citing, Gabriel Kolko, The Triumph of Conservatism, Chicago, 1967 [68] Barnard, Draining the Swamp, p. 89. The movement was already much in progress across the nation, Rembar, The Law of the Land, p. 238. [69] Friedman, A History of American Law, pp. 391–411. [70] Karp, The Politics of War, pp. 3–116. [71] Friedman and Schwartz, A Monetary History of the United States, 1867–1960, pp. 10, 216. [72] Karp, The Politics of War, pp. 119–323. [73] United States Statutes at Large, Volume 40, Chapter 30 (p. 217ff). [74] United States Statutes at Large, Volume 40, Chapter 15 (p. 76ff). [75] Amending the Espionage Act of 1917, Volume 40, Chapter 75 (p. 553ff). [76] Schenck v. United States, 249 U.S. 47 (1919); Debs v. United States, 249 U.S. 211 (1919); Sugarman v. United States, 249 U.S. 182 (1919); Frohwerk v. United States, 249 U.S. 204 (1919); Abrams v. United States, 250 U.S. 616 (1919). [77] Selective Draft Law Cases, 345 U.S. 366 (1918); Schenck V. United States, 249 U.S. 47 (1919); the latter case is where Justice Holmes postulated his “clear and present danger” doctrine. [78] Karp, The Politics of War, pp. 326–327. [79] Karp, The Politics of War, p. 326. [80] Weinberg, “A Short History of American Capitalism,” p. 158. [81] Greider, Secrets of the Temple, p. 289. [82] How the Fed helped is open to discussion. Although blaming the Federal Reserve Board (FRB) for the monetary contraction of the 1930s, Friedman and Schwartz claim the FRB did not inflate the currency during the 1920s because prices fell during the period; thereby implying a slight deflation. Friedman and Schwartz, A Monetary History of the United States, 1867–1960, pp. 296–298. However, Rothbard claims the nation’s prosperity was due to a construction boom and improved efficiencies. Thus, prices did indeed fall, but were masked by the FRB pumping new currency into the market through their newfound powers of open market operations. Reduced discount rates further fueled the boom. Rothbard, America’s Great Depression. The distinction between the two opinions is differing definitions of inflation. [83] Greider, Secrets of the Temple, p. 292. [84] Rothbard, America’s Great Depression; and Friedman and Schwartz, A Monetary History of the United States, 1867–1960, Chapter 7, The Great Contraction. [85] Gwartney and Stroup, Economics, Private and Public Choice, pp. 273–274. [86] Barnard, Draining the Swamp, pp. 62–63. [87] For a interesting analysis of the constitutional and national impact of Reconstruction and New Deal politics, read Ackerman, We The People: Transformations. [88] Livingston and Thompson, The Consent of the Governed, p. 171. [89] Rothbard, “Left and Right: The Prospects for Liberty,” pp. 13. [90] For example, read Panama Refining Co. v. Ryan 293 U.S. 388 (1935), Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935). [91] For example, read N.L.R.B. v. Jones and Laughlin Steel Corp., 301 U.S. 1 (1937). [92] Ackerman, Transformations, Part III; Hayek, The Constitution of Liberty, p. 191. [93] Kammen, A Machine That Would Go Of Itself, pp. 323–324. [94] 304 U.S. 64 (1938). [95] Hinderlider v. La Plata River and Cherry Creek Ditch Co., 304 U.S. 92 (1938). [96] 41 U.S. (16 Pet.) 1, 1842. [97] Ackerman, Transformations, p. 370. [98] Read United States v. Carolene Products, 304 U.S. 144 (1938), Footnote 4. [99] Ely, The Guardian of Every Other Right, p. 133. [100] For example, refer to United States v. Darby Lumber, 312 U.S. 100 (1941) upholding the Fair Labor Standards Act; or Wickard v. Filburn, 317 U.S. 111 (1942). [101] Livingston and Thompson, The Consent of the Governed, p. 173. [102] 317 U.S. 111 (1942). [103] Howard, The Death of Common Sense, pp. 24–25. [104] Livingston and Thompson, The Consent of the Governed, p. 187. [105] Doris, The American Way in Taxation, p. 115–120. [106] Dickstein, Judicial Tyranny, pp. 7–8. [107] Ely, The Guardian of Every Other Right, p. 132. [108] The History of Freedom and Other Essays, 1907, cited in Bartlett’s Famous Quotations. |
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