The Terrible Tens

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Governments ruined pretty well every decade of the 20th Century in one way or another, but those of the 1910's were arguably the worst.

First, there was the establishment of the Federal Reserve. Since it was "merely" a club or association of private banks, the FedGov was able to have the cake of not exceeding its Constitutional powers by setting up a central bank, yet also to eat it by enjoying the effect of a central bank that would do its every whim. The result over the following 92 years has been to take a "dollar," the purchasing power of which increased during the 19th Century by over 50% as American ingenuity pushed up productivity against a currency unit more or less fixed to the value of gold, and squandered more than 19 nickels out of every 20 of its value on government spending, so helping massively to expand the latter's role.

Fast on its heels in 1913 came the infamous Sixteenth Amendment and the income tax that it allegedly permitted. Originally touted as a tiny tax on the very, very rich, it now sucks one dollar in five from the pocket of every American worker. The details of this fraud are fascinating; first, the Amendment was in fact not ratified at all by the requisite 3/4 of the states, yet it was falsely declared to have been ratified, by Secretary of State Knox. All but six states modified the text that had been submitted for their approval, either deliberately or inadvertently (and who can tell the difference?). The blow-by-blow details of this part of the fraud were laid bare by Bill Benson in his "Law that Never Was," but that is only the start of it.

The rest was uncovered by Irwin Schiff in his "Great Income Tax Hoax" and shows that even supposing it was properly ratified, Amendment 16 only permits Congress to tax "income" without apportionment, and as two Supreme Court opinions stated even before the Terrible Tens ended, "income" is a legal term meaning "corporate profit" and so (as one of those decisions expressly said) Amendment 16 "gave Congress no new taxing power" whatever! The IRS will stubbornly disagree, but if (like me) you didn't receive any corporate profit last year, you don't owe a dime in income tax. Nonetheless, the fraud has been successfully continued and this non-tax has grown to furnish money for fully 50% of all the havoc the FedGov wreaks.

The third major disaster of the 1910s occurred in 1917.

Soon after inauguration, having won the 1916 election on a promise of continuing to keep America out of the European bloodbath, Woodrow Wilson persuaded Congress to declare war on Germany , a wicked double-cross that set an example for FDR to copy almost verbatim 24 years later. The details of how and why this happened are recalled in a most readable book that I have just enjoyed, Thomas Fleming's The Illusion of Victory, which reveals not just the political intrigues that surrounded the betrayal but also points out the awesome cost of American intervention.

Fleming wonders aloud, on page 480, what would have happened if Wilson had not flip-flopped and America had stayed strictly neutral. This speculation just boggles the mind, and it does assume proper neutrality (i.e., that US traders would be free to sell or not sell equally to either side in the conflict and at their own risk).

First, WW-I would have ended in a stalemate, probably in 1916 and for sure by 1917. All sides were by then already exhausted, and if the US had not been supplying the Brits in and after 1915, leading them to hope for a full intervention, a halt would have been called and a peace patched up--without either side having grounds for massive resentment.

That being so, the Germans would have had no occasion to spirit Lenin and Trotsky into Russia in 1917 with funding to bring about the Bolshevik Revolution and take Russia out of the war. Russia would have recovered, not as a free society but at least as a democratic republic; the seven decade nightmare of Communist tyranny would not have taken place.

Third, no Versailles diktat would have ruined and outraged Germans by the imposition of impossibly harsh reparations and territorial confiscations, so giving Hitler's Nazis the opportunity to be elected.

Accordingly, there would have been no Second World War, nor Korean War, nor Vietnam Era nor Cold War. I suppose the atom bomb might have been invented, but never used.

Jews would not have been murdered by the million in the early '40s, so the pressure for a homeland would have been containable; no doubt individual Jews would have migrated to Palestine and been integrated, but with any luck, no Israeli state would have been set up to offend every Muslim and Arab nostril in the world. Consequently, no resentment would have arisen there such as led to 9/11 and thus to the Patriot Act.

All this, from one single event in the Terrible Tens: Wilson 's breaking of a 1916 election promise. And yes, from the Fed that permitted money to be printed to fund the Great War, and the "income tax" that helped it furnish fuel for the Second.

But politicians are not in the business of keeping promises, nor of honoring legal restrictions, nor of ensuring that any laws they write are accurate or honest; they are in the business of enjoying power. I was shocked to read in Fleming's account that even in an age when the Constitution was supposedly well regarded, after war had been declared, Americans were quite routinely imprisoned for decades for daring to speak out against it. The Patriot Act is by no means new.

Wilson 's betrayal was probably not the most heinous political act of his era; he did what he did out of doubtless sincere motives and high ideals. Nor was he the prime architect of the 1919 Versailles disaster; the air there was so thick with vindictiveness and villainy that even John Maynard Keynes appeared a paragon of virtuous moderation. Even so, Wilson 's reversal did open the door to the premature deaths of scores of millions of human beings. I disagree, but government is said to be justified because men are not good enough to rule themselves; the example of Wilson is proof positive that they are certainly too wicked to rule anyone else.

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Jim Davies's picture
Columns on STR: 243

Jim Davies is a retired businessman in New Hampshire who led the development of an on-line school of liberty in 2006, and who wrote A Vision of Liberty" , "Transition to Liberty" and, in 2010, "Denial of Liberty" and "To FREEDOM from Fascism, America!" He started The Zero Government Blog in the same year.
In 2012 Jim launched http://TinyURL.com/QuitGov , to help lead government workers to an honest life.
In 2013 he wrote his fifth book, a concise and rational introduction to the Christian religion called "Which Church (if any)?"