"America: From Freedom to Fascism"

I suppose I can post these words now, although I wrote them some months ago.

They were written, originally, for an audience of one. Call him B. He runs an ad agency, and he's nicer than the nicest guy you've ever met.

He got the account to come up with an ad campaign for Aaron Russo's America: From Freedom to Fascism. (No, I did not do the key art -- that credit belongs to the best designer in the city, a terrific artist who has always beat me handily every time we went into head-to-head competition.) I never met Russo -- who came close to being the Libertarian candidate for president in 2004. B always speaks very highly of him, and I have every reason to presume that he is a decent, well-meaning fellow.

Originally, I had offered to give the movie free ad space on my blog. Not that this would have made any great difference at the cash register, but every little bit helps.

Then I saw an advance DVD copy of the film.

It's an anti-tax movie. And it repeats every false quotation and pseudo-fact current in the IRS-haters' handbook. I told B I could have nothing to do with the project. While I encouraged him to maintain both his friendship and professional relationship with Russo, I strongly discouraged any belief in the film's "facts."

It would have been professionally discourteous to publish a counter-Russo piece at an earlier time. But now that the film has made (most of) its money, I feel free to share my research, which I presented to B in the form of two emails. I'll reprint the first of those emails (slightly re-written) here. I do so because Russo's "findings" have passed into public belief without any significant challenge.

* * *

Aaron Russo’s “America: From Freedom to Fascism”

An examination of the first five minutes:
Lies, distortions and “false quotation syndrome”

I will devote this paper to a point-by-point examination of the pre-credit sequence of Aaron Russo’s “America: From Freedom to Fascism.” With the possible exception of the very first point, I will devote my comments to matters of objective and verifiable fact, rather than opinion.


1. America was more free and had a higher standard of living before 1913.

Ridiculous.

Ever see Gangs of New York? That film was based on history. Ever familiarize yourself with the works of the original muckrakers, such as Jacob Riis? Ever read about the trusts? Boss Tweed? The robber barons? The history of the railroads? Company towns? Child labor? Six day work weeks? Twelve hour days? Slavery?

The American people had a dramatic increase in their standard of living in the 1950s, when the top tax rate was over 80%. Standards of living declined under Reagan, Bush I and Bush II, who lowered the top tax brackets; there was an increase under Clinton, who made taxation more progressive.


2. James C. Fox quote: “If you...examined [the 16th Amendment] carefully, you would find that a sufficient number of states never ratified the Amendment.”

Misleading and truncated.

Judge Fox of North Carolina spoke on the basis of a dim recollection of the sorts of arguments we shall deal with below. This is not a court opinion, simply something he uttered during a hearing.

Fox offered this observation while deliberating a rather crankish lawsuit filed in 2003 by two members of the North Carolina National Guard, who felt that the War Powers act was unconstitutional. Fox argued that the Constitution had, in essence, evolved. He then cited the 16th amendment as an example of this sort of evolution. Here’s the full quote, emphasis added:

(To read the rest, click "Permalink" below)

"If you were to go back and try to find and review the ratification of the 16th Amendment, which was the internal revenue, income tax, I think if you went back and examined that carefully, you would find that a sufficient number of states never ratified that amendment. And nonetheless, I think it is fair to say that it is part of the constitution of the United States, and I don't think any court would ever set it aside. Well, I've seen that. I've seen somewhere a treatise on that, and I think it was --- I think I'm correct in saying that actually the ratification never really properly occurred. Yet nonetheless, I'm sure no court's going to say that the 16th Amendment permitting income tax is void for any reason. I think there may be something analogous there vis a vis the continued practice of the Executive to have incursions and police actions or to commit the country to hostilities without the formal declaration of war."

Fox cannot cite the source of his impression. He hasn’t studied the matter because it was not germane to the case under discussion. He mentioned the amendment only in passing.

In sum: Russo implies that Fox claimed the Amendment to be unconstitutional; in fact, Fox made exactly the opposite point. Russo implies that Fox ruled on a case involving the 16th Amendment; in fact, the case was about a completely different matter. Russo implies that Fox had studied the facts; Fox could not recall where he got his “facts.”


3. The Federal Reserve Act passed “without the required Constitutional Amendment.”

False and inane.

Congress passes acts all the time. That's what Congress is for. The Federal Reserve Act of 1913 did not require a Constitutional amendment. Russo calls the act unconstitutional, yet that is a determination to be made by the courts, not by Aaron Russo. The constitutionality of this act has been upheld by federal courts.

This citation comes from a piece by Edward Flaherty, Ph.D. Department of Economics College of Charleston, S.C.:

U.S. v. Rickman, 638 F.2d 182, C.A.Kan. 1980:

Federal Reserve Notes in which the defendant, charged with failure to file federal income tax returns, was paid were lawful money within the meaning of the United States Constitution. 26 USCA §7203; USCA Const. Art. 1, §8, cl. 5. U.S. v. Wangrund, 533 F.2d 495; C.A.Cal. 1976

The statute establishing Federal Reserve Notes as legal tender for all debts, public and private, including taxes, is within the constitutional authority of Congress; thus the defendant could not overturn his conviction on two counts of wilful failure to make an income tax return on the theory that he did not receive money since checks he received as compensation for his services could be cashed only for Federal Reserve Notes which were not redeemable in specie. 26 USCA (IRC 1954) §§61, 7203; USCA Const. art. 1, §8; Coinage Act of 1965, §102; 31 USCA §392.
Nixon v. Individual Head of St. Joseph Mortgage Company, 615 F.Supp. 890, affirmed 787 F.2d 596. D.C.Ind. 1985. Federal Reserve notes are legal tender.

Note Russo’s careless citation of judicial authority. Judge Fox’s statement is treated reverently, even though he spoke off-the-cuff about a matter not really at issue in thehearing then at hand. But the legitimacy of the Federal Reserve was upheld by the courts cited above, in cases where that legitimacy was specifically at issue.


4. Nathan Mayer Rothschild quote: "Give me control to create a nation's money and I care not who makes its laws.”

Fake.

I looked into this some years ago. The quote (usually attributed to Nathan Meyer Rothschild, but sometimes to other members of the family) appears in no biography of the Rothschild family known to me. Neither Niall Ferguson nor Frederick Morton cite it. (Actually, I wrote to Ferguson about this, but he never wrote back.) The earliest citations I could find were in anti-Semitic publications. Nathan Meyer Rothschild did say some pretty hair-raising things “way back when,” but for some reason the anti-Semites prefer this fake quote to the real ones which you can find in Ferguson’s book.

The quotation is a deliberately garbled version of something Carlyle once said: “Let me make a nation’s songs, and I care not who makes its laws.”


5. Wilson quote (re: the creation of the fed): “I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men.”

Fake.

This quote, which Russo says Wilson made on September 25, 1919, appears in no biography of Wilson I found online or at the local library. On the date in question, Wilson was in Colorado giving a speech about the League of nations -- as you will recall, this was the issue on which he had staked his presidency. That speech does not contain the quote.

From wikipedia, we learn that similar words appear in Wilson's 1913 book, The New Freedom. The actual quote:

A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men ... [W]e have come to be one of the worst ruled, one of the most completely controlled and dominated, governments in the civilized world—no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and the duress of small groups of dominant men.

He was not talking about the Federal Reserve, and he never expressed regret over its creation. He was talking about trusts, the concentration of wealth, and the influence of big business on Congress, especially on what became known as the "Taft Republicans."


6. The 16th amendment was never ratified.

Bullshit.

I’ve been hearing this claim for as long as I can recall. Each time I have tried to look into the matter, I find that the person making it relies on strained rationalizations. The best summary and refutation of those rationalizations can be found here:

Although the Constitution describes how to ratify amendments, it doesn't say how we know when an amendment has been ratified. After some confusion about the status of some amendments (including the infamous "Titles of Nobility" amendment that fell at least one state short of ratification, but appeared in numerous copies of the Constitution in the early and middle 1800s), Congress decided that the Secretary of State should certify what amendments have been ratified.

The argument that the 16th Amendment was not ratified is best explained (and refuted) by this quotation from U.S. v. Thomas, 788 F.2d 1250 (7th Cir. 1986), cert. den. 107 S.Ct. 187 (1986):

"Thomas is a tax protester, and one of his arguments is that he did not need to file tax returns because the sixteenth amendment is not part of the constitution. It was not properly ratified, Thomas insists, repeating the argument of W. Benson & M. Beckman, The Law That Never Was (1985). Benson and Beckman review the documents concerning the states' ratification of the sixteenth amendment and conclude that only four states ratified the sixteenth amendment; they insist that the official promulgation of that amendment by Secretary of State Knox in 1913 is therefore void.

"Benson and Beckman did not discover anything; they rediscovered something that Secretary Knox considered in 1913. Thirty-eight states ratified the sixteenth amendment, and thirty-seven sent formal instruments of ratification to the Secretary of State. (Minnesota notified the Secretary orally, and additional states ratified later; we consider only those Secretary Knox considered.) Only four instruments repeat the language of the sixteenth amendment exactly as Congress approved it. The others contain errors of diction, capitalization, punctuation, and spelling. The text Congress transmitted to the states was: "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." Many of the instruments neglected to capitalize "States," and some capitalized other words instead. The instrument from Illinois had "remuneration" in place of "enumeration"; the instrument from Missouri substituted "levy" for "lay"; the instrument from Washington had "income" not "incomes"; others made similar blunders.

"Thomas insists that because the states did not approve exactly the same text, the amendment did not go into effect. Secretary Knox considered this argument. The Solicitor of the Department of State drew up a list of the errors in the instruments and--taking into account both the triviality of the deviations and the treatment of earlier amendments that had experienced more substantial problems--advised the Secretary that he was authorized to declare the amendment adopted. The Secretary did so.

"Although Thomas urges us to take the view of several state courts that only agreement on the literal text may make a legal document effective, the Supreme Court follows the "enrolled bill rule." If a legislative document is authenticated in regular form by the appropriate officials, the court treats that document as properly adopted. Field v. Clark, 143 U.S. 649, 36 L.Ed. 294, 12 S.Ct. 495 (1892). The principle is equally applicable to constitutional amendments. See Leser v. Garnett, 258 U.S. 130, 66 L.Ed. 505, 42 S.Ct. 217 (1922), which treats as conclusive the declaration of the Secretary of State that the nineteenth amendment had been adopted. In United States v. Foster, 789 F.2d. 457, 462-463, n.6 (7th Cir. 1986), we relied on Leser, as well as the inconsequential nature of the objections in the face of the 73-year acceptance of the effectiveness of the sixteenth amendment, to reject a claim similar to Thomas's. See also Coleman v. Miller, 307 U.S. 433, 83 L. Ed. 1385, 59 S. Ct. 972 (1939) (questions about ratification of amendments may be nonjusticiable). Secretary Knox declared that enough states had ratified the sixteenth amendment. The Secretary's decision is not transparently defective. We need not decide when, if ever, such a decision may be reviewed in order to know that Secretary Knox's decision is now beyond review."

It has also been claimed that the votes of Georgia legislature were recorded incorrectly and that Georgia actually rejected the amendment, contrary to Knox's report. However, no Congressman or other official from Georgia has ever complained about the "error" and, even if there was an error and Georgia did not ratify the amendment, there would still have been thirty-seven ratifications, one more than the thirty-six required. (Article V of the Constitution requires that amendments to the Constitution be approved by the legislatures of three fourths of the states, and there were forty-eight states in 1913.)

Another claim is that the ratification of the 16th Amendment by several states was invalid because the constitutions of those states prohibited an income tax. A similar argument as to the 19th Amendment was flatly rejected by the U.S. Supreme Court in Leser v. Garnett, 258 U.S. 130 (1922):

"The second contention is that in the Constitutions of several of the 36 states named in the proclamation of the Secretary of State there are provisions which render inoperative the alleged ratifications by their Legislatures. The argument is that by reason of these specific provisions the Legislatures were without power to ratify. But the function of a state Legislature in ratifying a proposed amendment to the federal Constitution, like the function of Congress in proposing the amendment, is a federal function derived from the federal Constitution; and it transcends any limitations sought to be imposed by the people of a state." 258 U.S. at 136-137.

Still another claim made by tax protesters is that the ratification of the 16th Amendment by Ohio was invalid because Ohio did not become a state until 1953(!). This strange claim is based on a strange action that Congress took in 1953 to confirm that Ohio was indeed a state. Briefly:

* By an act of April 30, 1802 (2 Stat. 173), section 1, Congress provided that "the inhabitants of the eastern division of the territory northwest of the river Ohio, be, and they are hereby authorized to form for themselves a constitution and state government, and to assume such name as they shall deem proper, and the said state, when formed, shall be admitted into the Union, upon the same footing with the original states, in all respects whatsoever." (This was consistent with the Northwest Territory Ordinance of 1787, which provided that there should be formed from the territory at least three but not less than five states. )

* A convention met in Ohio on November 1, 1802, and adopted a constitution on November 29, 1802.

* On January 19, 1803, a special committee of Congress reported that "the said Constitution and government so formed is republican, and in conformity to the principles contained in the articles of the ordinance made on the 13th day of July 1787, for the Government of the said Territory: and that it is now necessary to establish a district court within the said State, to carry into complete effect the laws of the United States within the same." Annals of Congress, 7th Cong., 2d sess., p. 21.

* Congress then enacted legislation to declare that all of the laws of the United States shall be in force within the state of Ohio and to establish a federal district court in Ohio, stating in the preamble that "the said state has become one of the United States of America." Act of February 19, 1803 (2 Stat. 201).

* Ohio began sending Representatives and Senators to Congress, began voting in Presidential elections, and has been considered to be a state ever since.

So what's the problem? When Ohio was preparing for the 150th anniversary of its statehood, researchers discovered that they couldn't establish the exact date that Ohio became a state, and that there was some confusion on the issue. For example, the Senate Manual (S. Doc. 5, 82d Cong., p. 570) gave the date as March 3, 1803, while the Congressional Biographical Directory (H. Doc. 607, 81st Cong., p. 76, note 9) gave the date as November 29, 1802. Further research showed that Ohio was unique because Congress declared that Ohio would become a state upon fulfilling certain conditions but had never formally declared that the conditions had been met. In admitting other states, Congress either declared that the state would be admitted as of a certain date, or passed an enabling act and then later declared that the state was admitted. In the case of Ohio, Congress passed an enabling act but never formally declared that the conditions of the enabling act had been met, either due to an oversight or due to a belief that a formal declaration was not intended and not needed.

In a 1953 report to Congress, the Legislative Reference Service of the Library of Congress stated that the lack of a formal resolution "may be considered unessential." (1953 U.S.C.C.A.N. 2126, 2128.) However, Ohio asked for a formal declaration, sending a new petition for statehood to Washington by horseback (yes, in 1953), and Congress complied (with a certain number of snide jokes), passing a joint resolution that declared Ohio to one of the United States of America as of March 1, 1803. P.L. 82-204, 67 Stat. 407. The Senate Report to the resolution states that the purpose was "to make formal, legal declaration of the de facto situation with respect to the admission of Ohio as a State of the United States." Senate Report No. 720, 1953 U.S.C.C.A.N. 2124.

So the fact of the matter was that Ohio was accepted as a state of the United States sometime in 1802 or 1803 and Congress declared the admission to be as of a certain date in 1803, but the declaration was not made until 1953.

But can courts even consider attacks on the validity of constitutional amendments? As noted by the 7th Circuit in Thomas, the argument that the 16th Amendment is invalid is not only legally and factually wrong, but it is an argument that federal courts are reluctant to consider. The federal courts have always recognized limits upon their powers, and one of those limits is that the courts should not get involved in issues that the Constitution has entrusted to other branches of the government. The Constitution says that Congress may propose amendments, and the states may ratify them. Whether an amendment has been properly ratified is considered to be a "political question" to be resolved by Congress and the states, and not in court. In a challenge to the validity of the 19th Amendment, the Supreme Court ruled that official notices of the state legislatures to the Secretary of State were "binding upon him, and, being certified by his proclamation, is conclusive upon the courts." Leser v. Garnett, 258 U.S. 130, 137 (1922).

For other decisions upholding the validity of the 16th Amendment, see United States v. Foster, 789 F.2d 457 (7th Cir. 1986), cert. den. 107 S.Ct. 273; Pollard v. Commissioner, 816 F.2d 603 (11th Cir. 1987); United States v. Benson, 941 F.2d 598 (7th Cir. 1991); Sochia v. Commissioner, 23 F.3d 941 (5th Cir. 1994), reh. den. 1994 U.S. App. LEXIS 22014; United States v. Stahl, 792 F.2d 1438 (9th Cir. 1986), cert. den. 107 S.Ct. 888; United State v. Sitka, 845 F.2d 43 (2nd Cir. 1988); Miller v. United States, 868 F.2d 236, 239-41 (7th Cir. 1989); Biermann v. Commissioner, 769 F.2d 707 (11th Cir. 1985); United States v. Buckner, 830 F.2d 102 (1987); United States v. Dube, 820 F.2d 886, 891 (7th Cir. 1986); Coleman v. Commissioner, 791 F.2d 68, 70-71 (7th Cir. 1986); United States v. Moore, 627 F.2d 830, 833 (7th Cir. 1980); Knoblauch v. Commissioner, 749 F.2d 200 (1984), cert. den. 474 U.S. 830 (1985); United States v. Matheson, (9th Cir. 1986); Lysiak v. Commissioner, 816 F.2d 311, 312 (7th Cir. 1987); Quijano v. United States, 93 F.3d 26, 30 (1st Cir. 1996); United States v. Mundt, 29 F.3d 233, 237 (6th Cir. 1994).

"Despite plaintiff's and numerous other tax protesters' conention that the Sixteenth Amendment was never ratified, courts have long recognized the Sixteenth Amendment's ratification and validity." Betz v. United States, 40 Fed.Cl. 286, 295 (1998).

"As the cited cases, as well as many others, have made abundantly clear, the following arguments alluded to by the Lonsdales are completely lacking in legal merit and patently frivolous: .. .. (4) the Sixteenth Amendment to the Constitution is either invalid or applies only to corporations . . . ." Lonsdale v. United States, 919 F.2d 1440, 1448 (10th Cir. 1990).

Again, note Russo’s janus-faced use of judicial opinion. He solemnly uses the quote from Judge Fox even though Fox spoke in passing, from uncertain memory, while deliberating a case that had to do with the War Powers Act, not the 16th Amendment.

Summary:

That is just the first five minutes of Russo’s film -- the pre-credit sequence. Except for the Orwell quote at the very beginning, every quotation is either an outright fraud or (in the case of the Fox quote) yanked from context. Nearly every statement of fact is questionable or false.

As a researcher, Aaron Russo would make a good dogcatcher.

* * *

Tomorrow, I will print the second email, which deals with the rest of the movie. Of course, I have no doubt that certain of my readers will scry malefic intent into the fact that I have here confined myself only to the first minutes of the film.