(Originally published in 2013.)
“There is a lot of ruin in a nation,” wrote Adam Smith. His point was that it takes a long time for nations to fall, even when they’re dead on their feet. And he was certainly right.
America took its fatal blow in 1913, one hundred years ago; it just hasn’t hit the ground yet. This is a slow process, but it’s actually fast compared to the Romans. It took them several centuries to collapse.
The confusing thing about our current situation is that America – and by that I mean the noble America that so many of us grew up believing was real – has long been poisoned. Its liver, kidneys, and spleen have stopped functioning. but it still stands on its feet and presents itself as immortal.
And I’m not without sympathy for those who want to believe. They find themselves in a world where politics is almighty, and where their comfort, prosperity, and perhaps their survival all hang in a delicate balance. They don’t want to upset anything, and questioning the bosses is a good way to get hurt.
But just because someone wants to believe doesn’t make it so. We are not children and we are not powerless. We producers should never be intimidated by those who live at our expense. So let’s start looking at the facts.
1913: The Horrible Year
For all the problems America had prior to 1913 (including the unnecessary and horrifying Civil War), nothing spelled the death of the nation like the horrors of 1913.
Here are the key dates:
The 16th Amendment to the United States Constitution was ratified, authorizing the Federal government to impose income taxes on individuals. An amendment to a tariff act in 1894 had attempted to do this, but since it was clearly unconstitutional, the Supreme Court struck it down. As a result – and mostly under the banner of bleeding the rich – the 16th amendment was promoted and passed.
As a result, the Revenue Act of 1913 was signed into law by President Woodrow Wilson in October. Income taxes began in 1914, with the government swearing (as in, “only a crazy person would say otherwise!”) that the rate would never, ever go higher than one or two percent.
And, by the way, the amendment was introduced by Senator Aldrich of Rhode Island, to whom we’ll come again shortly.
The 17th Amendment to the United States Constitution was ratified, taking the powers of the states and transferring them to Washington, by mandating the popular election of senators.
Previously, senators were appointed by state legislatures, which, by design, restrained the power of the national government. This change gave political parties immediate and massive power, nearly all of which was consolidated in the city of Washington.
The amendment was ratified in the name of making the national government a force for good, under the direct control of the people. It was true that state governments were often corrupt, but the implied idea that Washington was pristine… it was and remains a fantasy. A structure featuring small, separate pockets of corruption is far less dangerous than one featuring a single, large seat of corruption, to which oceans of money are gathered. As Thomas Jefferson wrote:
It is not by the consolidation or concentration of powers, but by their distribution that good government is effected.
Woodrow Wilson signs the Federal Reserve Act, which had passed Congress just the previous day. This system – called the Aldrich Plan, and promoted by Senator Nelson Aldrich of Rhode Island – gave a monopoly on the creation of dollars to a consortium of large banks.
The Act was passed, by the way, in the name of financial stability.
And Senator Aldrich? Wikipedia says this about him:
He… dominated all tariff and monetary policies in the first decade of the 20th century… Aldrich helped to create an extensive system of tariffs that protected American factories and farms from foreign competition, while driving the price of consumer goods artificially high… Aldrich became wealthy with insider investments in streets, railroads, sugar, rubber and banking… His daughter, Abby, married John D. Rockefeller, Jr., the only son of John D. Rockefeller.
Here is why I say that these three changes of 1913 killed America:
They robbed every producer in America of their money and handed it to politicians.
Until 1913, ordinary people kept their money. Carpenters, grocers, and repair men were able to make business loans and to retire on stock dividends. Once the income tax came in, however, politicians were empowered to skim off more and more of their money, which is precisely what happened. While the modern skim is multi-faceted, the average producer is now stripped of half his or her earnings every year, leaving politicians to spend it.
They consolidated all power in Washington DC.
This is precisely what James Madison wished to avoid when writing the US Constitution. (Again, note the Jefferson quote above.) By depriving the states of their remaining power, the City of Washington had no opposition. Since then, the Washington government has taken over practically everything on the continent and is choking it to death… a lot like the city and empire of Rome before it.
They created a money empire that took over almost everything.
When you start talking about central banking, and how it provides politicians with free money, people generally turn away from it, because it’s just too much to take. And so I won’t.
I could add more, but I think my point is made. America, as we grew up thinking of it, is over. The ideas may live on in some of us, but they no longer live in the political arena. It’s over.
What remains to be seen is what Americans will do next.