When heuristically discussing the dire 21st Century standing, and flagrant economical and fiscal practices, of the federal authorities, the 20th Century federal practitioners of this debatable socialist doctrines of economist John Maynard Keynes almost always say that there can be no viable comparison between national economics and financial policy prior to 1913, and that which inexorably came after that pivotal year. How true it is that a strictly polemic discussion about the condition of austere financial flux in the United States later 1913 cannot be satisfactorily pursued with any degree of success in determining official culpability for its horrible economic and financial mess which has prevailed in the nation. To pursue this correctly, the sordidly unconstitutional processes and policies urged by the federal authorities during, and afterwards, 1913 must be remembered and examined, the guilty people responsible for the legislation and its implementation have to be termed, and the deceit and conspiracy that resulted in the awful financial calamities and conditions, described by gloomy, though correct, history, to prevail at the first three years of the 20th Century need to be analyzed and analyzed for what they exactly were.
Therefore, if the reasons for the abject economic and financial problems of the 21st Century federal authorities may be properly credited to their root causes, what would those triggers be, and from whence did they come? The distinguished economic analyst Henry Hazlitt, in his books, “Economics in One Lesson,” and “The Failure of the New Economics: An Analysis of the Keynesian Fallacies,” summed up the faults of this Keynesian socialist economics imposed after 1913 by Woodrow Wilson and Franklin Roosevelt into three primary classes, 1) unconstitutional taxation, 2) rampant socialism, and 3) egregious national deficit spending in the making of a, essentially, unpayable federal debt. He points out that from U.S. Supreme Court Chief Justice John Marshall’s 1792 confirming vote in the Supreme Court case McCullough v. Maryland, that announced Alexander Hamilton’s First Bank of the United States as inherent, and that it could not be taxed by a State entity, arrived the 1913 unconstitutional Federal Reserve Act, where the Article 1, Section 8 power of Congress to coin money and ascertain its value was relinquished by the Legislative branch and awarded illicitly to a personal cartel of personal bankers known as the Federal Reserve Board. This, naturally, was not true and inherent, as was obviously maintained by Thomas Jefferson and James Madison, but Washington, a soldier and not a scholar, was putty in the hands of the persuasively sophistic Alexander Hamilton.
So, therefore, let us take Hazlitt’s categories, one by one, starting with unconstitutional taxation, and examine the prior and present taxing status of the national government. Prior to this year 1913, the federal government was funded exclusively by excise taxes or tariffs, and it functioned very well on those tariffs. Before the dubious ratification of the 16th (income tax) Amendment in February 1913, the federal government had very few fundamental constitutional responsibilities, and financed those essential responsibilities with no usage of an earnings tax. Why was this so? It was because an income tax was an un-apportioned indirect taxation and, thus, blatantly unconstitutional and illegal for the federal government to inflict. Since he had already unilaterally suspended federal habeas corpus, an egregiously unconstitutional action, he presumed to have complete power to do anything to attain his illegal end objectives. In the conclusion of the American Civil War, Lincoln’s income tax was, nevertheless, immediately repealed, also throughout the following peacetime, the national government managed to operate efficiently, and entirely, on import taxes called tariffs. Congress was fully capable to run the national authorities on tariffs alone since federal duties didn’t include unconstitutional welfare applications, agricultural subsidies, or social insurance programs like Social Security or Medicare. Following the Civil War, however tariff revenues sometimes suffered under a protectionist policy ushered in by the Republican Party, which fostered federal income through excises on alcohol, tobacco, and inheritances, the national government always managed to operate efficiently with a balanced budget. During times of war throughout early American history, before the American Civil War, the Founding Fathers were constantly able to raise additional earnings using different methods of direct taxation authorized by the U.S. Constitution prior to the 16th Amendment. These alternate taxing methods gave the young American country embarrassing peacetime funding surpluses that many times came near to paying off the national debt.