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.The Eternal American Battle - Humans V Money

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Friday, April 03, 2009

HUNTING THE BIG UMBER BIRD

I know very little about Charles Pollock. I know he lived in Boston in the 1890’s. I know he worked in a bank. And I know that he was narcissistic. I know this because in 1894 Charles fought a lawsuit all the way to the Supreme Court which resulted in the temporarily landmark case of Pollock verses the Farmers’ Loan & Trust Company. It was that case which made Charles the hero of the modern anti-tax movement. But in all honesty, I find that particular obsession celebrates, to borrow a description from Tom Wolf, “…the logician who flies higher and higher in ever-decreasing circles until, with one last, utterly inevitable induction, he disappears up his own fundamental aperture and emerges in the fourth dimension as a needle-thin umber bird.” (“From Bauhaus to Our House”)
The U.S. government had been taxing income since 1861, as permitted in the Constitution under Article 1, Section 2 ("Representatives and direct Taxes shall be apportioned among the several states…") and Article 1, Section 8 ("The Congress shall have Power To lay and collect Taxes,…"). But in 1862 Supreme Court Chief Justice Roger Taney (above), the author of the Dredd Scott decision which had helped to bring on the civil war, was incensed that money was actually being taken out of his paycheck to help pay for that war. But Taney’s objections also struck a cord with those who might not like slavery but who just didn’t think they deserved to be paying taxes. And they were often powerful people. In 1872 the income tax laws were repealed.For the next twenty years the Federal government struggled along supported by import duties alone, which amounted to less than 2% of the nation’s gross domestic product, but which were still up to 48% of the value of any individual product. This protected domestic companies and allowed them to keep their prices high. The problem was (and is) that tariffs thus raised the price of consumer goods while allowing the wealthy, who spent a low percentage of their income on food and shelter, to accumulate vast, untaxed fortunes. Congressman William Jennings Bryant of Nebraska labeled high tariffs as “socialism for the rich”. “They weep more because fifteen millions are to be collected from the rich than they do at the collection of three hundred millions upon the goods which the poor consume.”Between 1871 and 1891 sixty separate bills were introduced in congress to reestablish an income tax. The Republican Party, the party of power at the time, beat all of them back. And then in 1893 a new tariff reform bill was introduced by Democratic Rep. William Wilson of West Virginia. The bill was primmarily designed to lower the import duties on foreign iron ore, coal, lumber, wool and sugar that entered this country. It also included a minor amendment, introduced by Rep. Benton McMillan (above), from Tennessee, which read, “That from and after the 1st day of January, 1895, there shall be levied, collected, and paid annually upon the gains, profits, and income of every person residing in the United States, derived from any kind of property, rents, interest, dividends, or salaries…a tax of 2 per cent on the amount so derived over and above $4,000” (equiv. of $88,400 in 2008 dollars) during any five year period.
Nobody paid much attention to Mr. McMillan’s amendment because so many income tax measures had been introduced so many times before, and none of them ever came to anything. Besides, the trusts put their trust in their secrete weapon.His name was Senator Arthur Gorman of Maryland, and he helped opponents of the Wilson bill to attach more than 600 amendments which reinstated almost all of the import duties. With the “Tariff reduction” bill thus gutted, no one believed that President Grover Cleveland, who had campaigned on a lower tariff platform, would ever sign the bill into law. And he didn’t. He simply let the bill become law without his signature. At least the tariffs had been marginally lowered. And that was how America returned to an income tax; briefly.The act required all stock companies to pay the tax for individuals before distributing any dividends to them. And when he received his notice from the Farmers' Loan & Trust Company (because he owned all of ten shares of stock in Farmers’ Loan & Trust) Charles Pollock contacted Wall Street lawyer Joseph Choate, who filed a lawsuit against the bank claiming the income tax was unconstitutional. The Massachusetts courts disagreed, as did the Federal courts. But somehow Charles Pollock found the money to appeal his lawsuit all the way to the United States Supreme Court, which to everyone’s surprise agreed to hear the case immediately.On April 8, 1895 the court ruled, 5-4, in favor of Mr. Pollock, saying in essence that the source of income mattered; salary could be taxed but income from property – rent, interest on savings or dividends paid on stock - were not “apportioned” by population, and thus the government was denied the power to tax.
The dissenting opinions were devastating. Justice Brown wrote that “This decision involves nothing less than the surrender of the taxing power to the moneyed class…Even the specter of socialism is conjured up to frighten Congress from laying taxes upon the people in proportion to their ability to pay them.”
And Justice Harlan argued that the court's majority opinion, “…declares that our government has been so framed that,...those who have incomes derived from the renting…or who own invested personal property, bonds, stocks and investments...have privileges that cannot be accorded to those having incomes derived from the labor of their hands, or the exercise of their skill, or the use of their brains.”It would take 11 years before the will of the people could overcome the power of the “moneyed classes”. In 1909 President Howard Taft proposed a Constitutional amendment to allow an income tax, and on July 12, 1909 the 16th amendment passed the Congress and was submitted to the states. It was brutally blunt and short. It reads in total, “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.”Alabama took less than a month to vote for the 16th amendment. Kentucky, South Carolina, Illinois, Mississippi, Oklahoma, Maryland, Georgia and Texas all passed it in 1910. Twenty-three states followed in 1911, three more in 1912, and six more in 1913. It was with the vote of the New Mexico legislature, on February 3, 1913, that made the 16th amendment the law of the land. Six states either rejected the amendment or never took it up, but that did not matter. The Constitution only requires that two-thirds of the states approve of an amendment to make it law. And so, when some lunatic or confidence man tries to sell you a magical scheme to avoid paying taxes, you can now explain that, by placing the source of support for the government in the people’s hands, income taxes place the power there as well.The relevancy of this narcissist tale to your life may become clearer when you realize that the Farmers Loan and Trust Company named in the lawsuit was established in 1822 in New York City. On June 1st 1929 they changed their name to City Bank Famers Trust, and in 1976 they changed their name again. This time they shortened it to Citibank.
This is the same Citibank that has recently swallowed at least 320 billion of taxpayer (meaning your) bailout dollars. Oh, as of 1894 Charles Pollock was an employee of Farmers Loan & Trust in their Boston branch. And it seems likely he sued his own employer with their connivance. Looking at history it seems to me that the limits to which the rich will go to avoid paying their fair share of government has been endless.
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Tuesday, March 31, 2009

APRIL FOOLS DAY, 2009


I don’t approve of practical jokes. I seen nothing humorous in having your shoes set afire while you are wearing them. And dribble glasses are not only not practical they are also not funny - especially on “April Fools Day”, when every glass is a dribble glass and every shoe is a potential combustion chamber. And it turns out that this celebration of sociopathic behavior was invented by the French, a nation without humorous inclinations since Moliere slipped on a banana peel in 1673. But the story of April Fool’s Day began long before that tragic event, when in 1564 King Charles IX decided to follow Pope Gregory’s suggestion and begin the New Year with January rather than April. Why the French originally celebrated New Years Day on April 1st, I have no idea.
Now, in the 16th century France had only one road. It came out of Paris, turned left, looped all the way around the city and re-entered on the other side of town. This tragic design error,(the World’s first traffic circle) made communication with the majority of the nation difficult (and introducing the phrase “Out-of-the-loop”) and when combined with the French phone system - which was in no better shape in the 16th century than it is today - meant that a lot of peasants never got the King’s memo concerning the calendar adjustment.
So as they had every year thousands of these ill-informed peasants journeyed to Paris during the last week of March and on what they thought was New Year’s Eve, gathered in Bastille Square to say bonjour to 1565 and watch the guillotine drop. In unison they gleefully chanted, “Cing, quartre, trios, deux, un” and…No guillotine. No satisfying plop of a head into the basket. No champaign corks popping. No le Dick Clark. Instead of cheers and shouts of glee, mass ennui broke out amongst the masses. Now anyone who has experienced the Parisian version of “good manners” can imagine what came next; the locals mocked the bewildered peasants and made them feel like complete Americans,…ah,I mean,fools. But the way they did it makes the word “odd” seem inadequate.
For reasons beyond understanding the Parisians snuck up behind their confused country cousins, surreptitiously stuck a paper fish to the bumpkin’s backs and then shouted in a loud voice, “Poisson d’Avril!”, which translates as “April Fish!”, and then collapsed in raucous laughter and shouts of “tres bien.”
Why would they shout “April Fish!”? Perhaps because the first Parisian to label his victim an April “fool” immediately received a mouth full of fist, while calling the victim an April “fish” confused him just long enough so that the prankster could escape.
I have long thought that this uncharacteristic outbreak of French “humor” was actually inspired by Charles’ Italian Queen, Catherine de Medici, who was already famous throughout Europe for her gastronomical gags, such as her duck a la cyanide with a hemlock sauce. Only a Medici could see the humor in humiliating the people who handled your food.
But however it started the Parisians knew a good time when they saw it and they sent peasants on “fool’s errands”, and tricked peasants with “fool’s tales”, until every April 1st France reverberated with gales of laughter and shouts of “Poisson d’Avril!” Good times. But eventually the Parisian bullies grew bored with taunting the unresponsive peasants and in 1572 they shifted their attentions to the Huguenots. But by then the tradition of humiliating people for your own amusement on the first day of April had become popular. And like Disco music and Special Federal Prosecutors, once invented some institutions have proven impossible to stop.
This holiday for the humor-impaired spread around the globe with the new calendar like a fungus, infecting and evolving a little in each afflicted nation. The Germans added the “Kick Me” sign, and a second day which they call “Taily Day”, to further enjoy the frivolity of bruised buttocks. Ahh, those Germans.
In Portugal today’s innocent victim is hit with flour, sometimes while it is still in the bag - the flour not the victim. In Scotland the target is humiliatingly referred to as an “April Gawk” (?!), in England as a “Noodle” and in Canada as an “American.” I would have expected mental health professionals to call for a stop to this public insanity but evidently they are too busy setting their patients’ shoes on fire.
There is no defense for April Fool tomfoolery except a preemptive strike. So button up your top button, zip up your pants, tie your shoes and look out for that cat. And repeat after me; “Poison d’Avril, sucker!”
Funny, huh?
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FRIDAY: AN UNPAID DEBT

PIKE'S PIQUE

I have been searching for the right word to describe Zebulon Pike, and I keep coming back to “Shlub”. It is Yiddish word meaning a foolish, stupid or inferior person. But at least he was handsome. He stood “…5'8" tall, with a ruddy complexion, blue eyes and light hair…(was) a crack shot…(with) great physical endurance …” He was also a teetotaler who one biographer kindly described as “an efficient but unremarkable career officer” while another put it more succinctly; “…a puffed-up little popinjay...”. As proof of Zeb’s shlub-dom I submit his first voyage of discovery in 1805 when he was ordered to find the source of the Mississippi River.The 27 year old lieutenant set out on August 9, 1805 from Fort Belle Fontaine, on the south bank of the Missouri River, four miles upstream from its joining with the mighty Mississippi. He was accompanied by what he called a “Dam'd set of Rascels,” 20 soldiers manning a 70 foot keelboat. He included on his voyage no doctor, no interpreter and no one qualified to map the voyage, including Pike himself. Because of the low water level, Pike’s men spent as much time dragging their boat over sand bars as they did laboriously poling it northward. Two days of exhausting work brought them to the mouth of Illinois River, near present day Grafton, all of twenty miles from their starting point.The Mississippi river has been winding and looping here for 145 million years, following a weakness in the crust now called the New Madrid Fault line. But north of the Illinois river the big river has been more influenced by ice.
A mere 130,000 years ago the “Wisconsin Ice Sheet” covered most of modern Indiana under a lake. When that ice collapsed the lake drained catastrophically. Called the Kankakee Flood it carved a valley so deep that when a similar glacier blocked the big river 13,000 years ago the Mississippi itself chose this channel, exiting its old course at Rock Island, Illinois, some 200 miles above St. Louis.Another 150 miles above Rock Island, Pike found a perfect place for a fort, a 500 foot tall bluff (locally called Pike’s Peak) across the river from Prairie du Chien, a trading post at the mouth of the Wisconsin River. No fort was ever built there but it was here that Pike finally agreed the 70 foot keel boat monstrosity was too much trouble and shifted his men to two barges, easier to handle in the low water.At the mouth of the Minnesota River (655 miles from his starting point), on September 23rd, 1805, Pike took advantage of a gathering of Sioux Indians for a little land grab. He promised to pay them less than a dollar an acre for land on which the government would eventually build a fort, which would eventually become the city of Minneapolis.
But when Congress finally paid up for their new “Fort Snelling”, in 1808, the price had been summarily reduced by 90%. And even that was actually paid to the French and British traders who had been feeding the Sioux rot gut whiskey on credit during the intervening three years. Commenting on the friendly welcome Pike received from the Sioux and the treaty Pike duped them into signing, a modern Sioux observed, “They gave him the keys (to the city), but they didn't expect him to think he owned the city”. I would say that seventy years later General Custer got the revised bill for this deal.The next morning Pike arose to discover his personal flag was missing. He threw a fit. He had a soldier stripped to the waist and flogged for losing it. The Sioux were so disturbed by this display of pique that they dispatched two men downstream who found the flag floating in the river and returned it to the intrepid if insecure explorer.Fifty miles further to the north Pike reached the 60 foot high St. Anthony Falls, where the river passed from the hard surface dolomites to the softer sandstone bedrock. It took three days for his men to drag their barges around the falls, and it occurred to Pike (finally) that the local Ojibwe Indian canoes’ were lighter and more maneuverable than his barges. But instead of asking for help, Pike instructed his men in hollowing out a large log. Loaded with supplies, including most of their black powder, the huge canoe was slid into the river…and immediately sank. Pike ordered all the wet powder rescued and stacked on a rack over a fire, to dry out. The resulting explosion burned down his own tent and most of his personal clothing, supplies and notes. He barely saved his trunk.Back into the river again, with the current lessoning and the channel narrowing every day, four of Pike’s men came close to physical collapse. Sergeant Henry Kennerman, ““one of the stoutest men I ever knew,” according to Pike, began to vomit blood. Zeb wrote the men were, “…killing themselves to obey my orders.” With snow already falling, on October 16, 1805, Pike ordered the men to build a blockhouse. While they worked, he hunted, supplying them with fresh meat.With Sgt. Kennerman in charge of the ill men left behind at the blockhouse, Pike led a small detachment overland, on snowshoes and pulling sleds, both borrowed from local British traders. They followed the river as best they could. On December 10th they reached the little falls of the Mississippi, and on the last day of the 1805 they camped near the mouth of the Pine River. On the night of January 4th Pike suffered another black powder explosion. (Where was storing his powder, in the smoking tent?)
Finally, on February 12th , 1806, “…exhausted and worn out by cold, hunger and exposure” Pike reached Red Cedar Lake (later renamed Cass Lake). Here, I suspect out of sheer desperation, Pike wrote, “This may be called the upper source of the Mississippi River.”Pike may have called it that, but it wasn’t. Twenty- six years later, in 1832, Henry Rowe Schoolcraft followed an Anishinaabe Indian guide (another approach Pike never tried) to a small lake that he named Itasca, and which he declared was the actual source of the great river, and that is what most tourist today accept. But that isn’t the actual source either.
The actual source of the “father of waters” is Little Elk Lake (below), 9 miles further upstream. Little Elk Lake drains into Elk Lake, which drains into Lake Itasca. Ninety days after a drop of rain falls on Little Elk Lake, it flows into the Gulf of Mexico.Pike was not very concerned with details like that. What concerned him was that when he got back to the blockhouse he found that Sgt. Kennerman had recovered. The Sargeant was feeling so well, in fact, that he had eaten or bartered away the entire companies’ supply of meat and Pike’s personal trunk as well, which had survived two explosions and at least one dumping in the river. No explanation for his actions was offered by the now Private Kennerman. But Pike lost no time in returning to civilization.He arrived back in Fort Belle Fontaine on April 30th , 1806. Ordered to find the source of the Mississippi, Lt. Pike had failed. In fact he had failed to locate a single stream, river or lake which had not been previously mapped. And yet the “Lost Pathfiner” was immediately dispatched to explore the southwestern edges of the Louisiana Purchase, during which he probably spotted a mile high peak named after him, and during which the long suffering Private Kennerman deserted, never to be seen again.Ever a self promoter, Pike rose to the level of Brigadier General during the War of 1812. And he played a crucial but little known role in that war. It was general Zebulon Pike who led the assault on the capital of Upper Canada, the city of York, (since renamed Toronto), on April 17, 1813. When a British mine exploded prematurely, killing 42 British and 52 American soldiers, Pike was hit in the back by a falling rock, which killed him. In retribution his soldiers burned the Parliamentary Buildings in York. And it was that act of vandalism which the British repaid by the burning Washington, D.C. on August 24, 1814.I would call that quite an impressive funeral pyre for a schlub.
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