Well, I see everybody's hanging in there. I appreciate that.
I wanted to just touch on a couple of points of yesterday.
I want to make sure you got them.
Remember I told you about the excise tax and how extensive it was in the Netherlands?
There's one quote here in the book I couldn't find at the moment,
but it's an English diplomat, and he said,
And he said, when in a tavern, a certain dish of fish is eaten with the usual sauce, about 30 several excises are paid.
I'll show you how extensive the tax was, and it's no small wonder that it ruined the Netherlands.
One of the great men of the Enlightenment is Montesquieu.
And I think, you know, if you want to get a book that you should have in your library, try and get his The Spirit of Loss.
And interestingly, in my experience with it, I referred to it in one of the books, and the editors always change the spirit of the laws.
And I say, why did you do that? The title of the book is The Spirit of Loss.
Well, we thought it sounded better. Yeah, but that's the title. You idiots, you know, this is the way you feel.
You do, you know, I've written a few books and you have to battle the editors and even you have to battle some of them to the point where you almost want to go kill them because they've changed.
I have a very good girl. She worked with Doubleday and she does my final work and she is really good. She doesn't change me at all.
She simply puts it in and she says, you know, you write the way you speak and it flows nice.
She says, I don't want to interfere with it. So I keep her. She's very good. I have to now send the stuff up.
She lives up in St. John, Newfoundland now, but I still keep in touch with her.
But one of the things that Montesquieu said, and I think it's worth dwelling on it,
he said, liberty sows the seeds of its own destruction.
It allows people to do things unchecked because there is that liberty, and negative or perhaps
Well, that's kind of what he said was, because he did it with taxes, you see, and he said that people bled their guard down, so to speak, and that they'll consent to excessive taxes, you know, because that's easy, and then once they get these excessive taxes, then they're really in trouble, because the government now requires
and is the word, extraordinary powers of oppression to enforce the excessive taxes.
So what you've done, believing in liberty, you think government's something wonderful,
and so yeah, we'll approve that, and then of course, then the government has trouble collecting,
and then they come down with a sledgehammer. And so that's historical thing. And the other thing
about Montesquieu that I like is that he was a historian. He was not a philosopher in the sense
The event that he concocted or logically came to these conclusions, he used history to back up the conclusion that he had, and he seems to me to have had historical sources that I don't know where they came from, because some of the events that he talks about, I don't know about them, and yet they're there and he doesn't document them like we'd like today, you know, a footnote or something, he just states that this happened historically.
I think that when we think of Montesquieu, it's all the spirit of laws, you can get it in paperback, it's a wonderful read, you'll love it.
And it has been said that the American Constitution would not be what it was today if it weren't for his book.
He's the one that expounded the separation of powers.
The Legislative, Executive and Judicial, and he laid it out and he thought that that's what the British system was, but it was quite so.
A lot of people say, well, he kind of misinterpreted it, but anyway, it's become the foundation of our Constitution.
One of the things that also occurred in this period that kind of gets us up into the modern American story is,
." Remember Walpole and his excise tax dragon and all the troubles he had, and he said he
was going to use the full weight of the crown to enforce his tax on the British people. And
he really did. I think that one British writer says that the rigors of his enforcement is
hardly consistent with the free people, and that was Blackstone in his great treatise.
Apparently that was one of the things that Lincoln actually read, was Blackstone, although
he never understood it, is my understanding.
But in this country we pass a tax to accomplish a certain thing, but it never gets repealed.
We pass the sales tax to help build schools during the period of integration, but as soon
And as soon as the schools were built, they kept on the sales tax anyway.
that happened in Canada, happens everywhere. It's also true, not just with taxes. The great danger of the Patriot Act and so many of these acts is that these intrusions in order to catch the bad guys, and then when the bad guys are gone, we still got them. So when we have bad, abusive, penal laws, we get stuck with them. And it seemed to be just the way of governments. They just don't want to give up their powers. Yeah?
Q. Isn't there one of the federal taxes on your phone bill, goes back to something, to the Spanish government, something totally ridiculous? It has no business being there. Now with the internet, somebody ought to get up a petition campaign and get rid of this.
A. There's a lot of bad laws on the book. There really are. It's amazing.
The worst thing is, since you brought this subject up about telephone, you know, they started the Gore Tax, which was added to every telephone line, you had to pay extra to service rural libraries, and I said, wait a minute, wait a minute, revenues are supposed to go into the House of Representatives.
Well, we have a lot of that. One of the university stories, I think it's in my book, is about
Davy Crockett. You know, we all remember Disney like Davy Crockett. Well, Davy Crockett was
a real guy, you know, and he was in Congress. And he voted for some appropriations for a
David, I supported you but I ain't supporting you now because you had no business appropriating
money to help the people from the fire in Georgetown.
Constitutionally you can't do that.
You don't have the right to spend our money for that.
And that gets you into an interesting provision of the Constitution. My mother will jump into it.
It's a question that's always fascinated me, because the Constitution says that tax money is going to be spent for three things.
For the common defense, to pay the debt to the United States, the common defense.
It didn't say you could engage in offensive wars.
And Hamilton, and everybody cites him as the great big government guy of the period, he
writes, and I think it's in 35 or 34 of the Federalists, he said we are embarking on a
novel experiment in the Constitution.
We are tying up the hands of government and preventing them from engaging in offensive wars.
And then he said that wars were the defense of the country because war is so expensive, that's okay.
But we are preventing wars of offense.
Now, when you think about that, you wonder, well, what are we doing in Iraq?
Vietnam was an offensive war, and we even stuck maybe World War I. We went charging in there like a bunch of damn fools. We certainly went after the Spanish.
We remember the Maine, when those ugly Spanish blew up the Maine, and then of course years later we pulled it up and found out it was internal combustion caused by coal dust.
But you see, in Hamilton, he's considered the great extremist in terms of big government power, but he tells us that, and that's in the Federalist, and lays it out pretty clear that that's why they said appropriation or taxes for the common defense, and no offense, but I'm getting a little ahead of you, but I think it indicates the fact that you can't trust what government says,
The Constitution. It has the provisions that we get, they get tossed out the window. Who was it that wrote, he was a humorist, he wrote in the 20s, and he talked, and he mentioned about the Constitution, and he said the provisions of the Constitution of Bill Rice had been thrown out the window, you know, and strange and novel interpretations have been applied.
In that same vein, some people are in favor of doling out government goodies to the less fortunate. They say the clause, and for the general welfare, what did the founders intend that to mean?
I mean, any old thing, you know, that's what accounts do, but they had these restrictions in the early days, but you couldn't do it.
In fact, I think President Monroe was faced with the need for certain imharber improvements.
And he said, I can't do it without a constitutional amendment, because there's no authorization for me to spend taxpayers' money to improve the harbors.
So they really believed in the Constitution in the old days, and now, you know, anything goes.
But anyway, try to remember that Hamilton thing, where we're embarking on a novel experiment,
tying up the hands of government and preventing them from engaging in offensive wars founded on reasons of state.
And reason of state is a French term, which means for the best interest of the state.
So there it is, and there's Hamilton, and there it is, I think it's 34 or 35 Federalists.
Yes?
Going back to Crockett, it's been a long time since I read the story you were talking about,
but I think you learned a famous lesson from that constituent who chewed him out of appropriating money.
They were trying to appropriate money for a pension or approve a pension for the will of an animal or something,
How can you go against taking care of people that have had misfortune, and widows, and fire victims, and so forth?
That's not what the Constitution was designed to do and able to do, and that's not what you can do.
Of course, it's so sad as we see that there isn't anything left of the Constitution.
I think the only thing that's really left is the fact that the President serves for two terms and four years for each term.
I mean, we've got to the point now where there just is no limit to government.
We have the concept, and I learned this in political science and colleagues of American government,
was here was the federal system with limited endowment of powers.
And they could only do this, this, this, this, you can read it.
You know, not only they can corn money, because now they don't, they print it.
I mean, now we're in the paper world.
World, they can punish piracy on the high seas, well we don't have that problem anymore,
they can uniform laws of bankruptcy, you go down the line, they were very specific in
what we can do, but none of that applies anymore, it's kind of too bad.
I love when they take the oath of office and they swear to defend the Constitution against
all enemies, foreign and domestic, and I always think domestic would be a good start, don't
You know, that thing with Debbie Crockett, at the end of that was, first of all, it was the Tennessee farmer that said this, to me that says so much, because here you have an ordinary person who knew about the Constitution, and second, Crockett was defeated.
You said you were in an election, and he said to the people of Tennessee, quote, to hell with you, and I'm going to Texas.
He was shocked, I think, by the fact that old Farmer Newton...
You bet he did. People knew what his government was about.
It's too bad they don't publish those things in books and television.
Well, if you read the foreword by Alvin Rybushka, and when I talked to him on the phone, he
went to Hollywood and tried to see if Hollywood would make a TV series on my book on the history
of taxes.
In fact, he says in there, he said it would be a gold mine for a TV series, but they don't
do things like that, I guess.
We talked about Walpole, and he was the first prime minister, but in 1732, long before the
American problem, and he was having all these excise tax revolts that were really pretty
rough, the governor of Virginia said to him that he thought they could tax the colonies
successfully.
And Walpole, in his wisdom, said, I already have old England against me.
I don't need to have New England again, so it never happened.
And they said that when he came to office he had the worst tariff in the world and when
he left he had the best.
The excise tax, they stopped them. I mean, export tax.
I meant export.
The North was quite concerned with, when the South succeeded, that they would put an export tax on cotton going North, so that the American, you know, clothing industry would have to pay a tax to get the cotton, and that was one of the motives for striking down the secession movement.
Part of that was to protect the British towns because they could not raise enough food or did not raise enough food and they did not want any of it shipped down.
One of the problems that developed in America at this time was that smuggling was pretty rampant.
They had the Molasses Act around 1730 or so, and this was designed to prevent cheap French molasses and sugar from coming into the colonies and competing against the British sugar, which was coming in from the British colonies.
The only thing is, it never worked very well. They were just not able to shut down the smuggling.
It was not a very successful trade act, but it was one that set the stage.
And one of the things, one of the New England traders I like, he talks about the Yankee smuggler.
And they said, these guys smuggle and smuggle, and they complain and complain.
And when we try to stop the smuggling, they complain about their rights.
And when one guy said if you talk to an American about paying taxes or about these various laws, he gives you a lengthy lecture on his rights, which was the American view.
Well, out of this, we had, to try and crack down on smuggling, we had the writ of assistance.
And this was a device that was developed in England in which a customs officer would think that somebody had some smuggled goods and so he would go to a judge and he'd sort out an affidavit and the affidavit would give the customs officer the right to bring in a policeman, almost, for assistance in making a search.
It was called the writ of assistance, so you assisted the custom officer based on an affidavit, based on an order from the judge.
Well, they came to America in a different form. In a different form, there was no judge.
All a custom officer had to do was sign a writ of assistance and go down to get the cops and they'd go out and proceed to make a search.
So they eliminated the judicial part of it, which became part of the Fourth Amendment ultimately,
because we didn't want to have a police officer making searches without court orders.
And we still have some of that left, don't we?
Well, the IRS has got the vest pocket summons. That's a little different.
So the IRS guy can walk up to you and pull in his vest pocket and hit you with a summons
and order you to bring in whatever he wants.
No judge involved at all.
So the vest pocket summons, that's the name of it, that the agents of the Internal Revenue
Service have really circumvented this because he can order you to bring it in and then you
can refuse to do it and then they'll cite you before the court and then you've got
for a judge, for contempt, it really circumvents that, but that is what was the basis of the Fourth Amendment.
And a fellow named James Otis, who was a lawyer in Boston, he resigned as Attorney General,
and he took this before the courts in Boston in 1761, and he wanted to strike this down.
is down. He thought it was the worst instrument of arbitrary power since the Star Chamber and the days of Charles I, and anyway, he just rambled on and on, and there was a young lawyer taking notes in the courtroom, and that's where we know about this, and that lawyer was a young man named John Adams, the President of the United States, and he wrote about it. So that was one of their complaints, was a writ of assistance.
Now, it appears to me from what I've been able to research that the writ of assistance wasn't really the problem in reality that it said it was.
That what would happen is that a Cutham's officer would have to take it to a judge and have it approved,
and the judges would put it over on the side of the desk and build up in a file, and they never got signed.
The colonial judges were kind of helping to thwart this thing, and the reason they had designed it is because the king had died, and under the principle of British law it had to be redone again, it had to go back and be approved by the judges.
We also had at this time the Sugar Act, and this came in just before the Stamp Act, the year before the Stamp Act.
and the Sugar Act was an attempt that cracked down on smuggling so that what was happening is that the smugglers were, really had the system wired so to speak, they would, they'd get arrested for smuggling and they'd turn around and they'd sue the customs officer and the customs officer would usually lose because everybody hated him.
The Sugar Act transferred all of the customs cases to the Admiralty Courts in Nova Scotia.
and now there's no jury and you got these pro-government courts and so it was not well
liked but a lot of people didn't complain it seems because the smuggling was so notorious
that a lot of people, bigger smugglers, were getting what they deserved.
So America's were great smugglers but I don't think we were as good as the British.
I think the British were the best smugglers there ever was because of all the coves and
and caves and bays around England, smuggling was, and that's the reason, of course, we had the excise.
Well then, at the time that this was being debated up in London, they were, in the drawing boards, they were drawing up a Stamp Act.
And a Stamp Act was what made Adam Smith say, in The Wealth of Nations, and he was talking about the Stamp Act,
He said, there's no art which one government learns from another
than how to drain money from the pockets of the people.
And actually, this was an ingenious tax, you know.
You didn't have any historical, you know, deep historical basis.
You know, all these other taxes go back to the ancient time.
But they concocted this idea of putting stamps on paper.
So, wills and documents and bill of ladings and everything you can think of,
you had to put a stamp on it.
And years ago, in some of the business I did, down in the Dutch Antilles, we had to prepare contracts with stamps on them. So stamp tax has still been around.
We had it in America, again in my experience, for real estate. You remember the turn of revenue stamps you had to put on deeds and so forth?
The Stamp Act was really a brilliant idea and so it was going to come to America and the American, the word got out what they were doing and on top of that King George said the same words that Walpole had used 50 years before he said we're going to use the full weight of the crown to enforce the stamp tax on the Americans and of course the Americans
and so they decided to all get together. Now prior to that time the colonies were all squabbled and they didn't have what's in common and now they realized they had a common enemy.
So they organized what was called the Stand Back Congress in New York City in 1765 and this was, many historians believe, the real birthplace of the United States.
Now the colonies come together for the first time they ever had, and they have a congress, and they have problems.
And what do they do? They send some of their best people to London, and who was their best man? It was Benjamin Franklin.
And he goes up and appears before the House of Commons, and he gives his little speech.
We Americans really love the British, and we're happy with all your laws, and we're willing to obey all your laws.
Laws, except we won't obey laws relating to internal taxes, and a stamp act is an internal
tax, and other than that will do anything you say, external taxes will be fine.
So he really put a shoe in his mouth.
So the Chancellor of the Czech Republic was a guy named Townshend, and he said, that is
was perfect nonsense, and that was what he is noted for, to make the distinction between
external and internal taxes. The Americans didn't really know themselves. What they were
really against was any taxes, period. That was basically their point, but they didn't
know that yet. They hadn't discovered how they really felt about it. So they go ahead
and the British cancelled the taxes and one of the reason they did it is because there was such an embargo against British goods that all of the ships up in Liverpool and London where the commercial vessels come in the New World couldn't come because the people were so damn mad they weren't going to buy anything from Britain and so it was really a commercial pressure on British merchants that caused the pressure
on the British Parliament, so they cancelled it, and it was easy to cancel it because it was perfect nonsense, so if you don't want internal taxes, then we'll give you external taxes, we'll tax T and all these various things, and though then we have the Townshend duties, well, yes?
Before you go into the character of the act, I want to defend George Granville a bit, who directed the Stamp Act.
He was a very thoughtful person, and Granville was always looking for the poor.
And he said, okay, I want to get a tax that will least affect the poor, and so what do we do?
and the Stamp Act was designed for that reason in mind.
It probably would escape 80% or 50% of the people in the United States because,
phrase is all, a newspaper that, well, half the people couldn't read at all.
That's right.
Almost everybody who read the newspapers, such as Franklin, were reading papers in the Northeast.
And so they were the only ones that were going to be there.
2. It was for lawyers, because the lawyers had the most wealth. They said, look, we're just going to ask you when you do deeds or official documents, it would just attack the lawyers.
Oh, they were so against it, because they were very, well, like the other day, they were the ones that were in the legislature and tried to do things.
And the most expensive tax at all, I think if I remember right, was 20 pounds, was for people who were graduating from college.
So it would be on their diplomas, huh?
And, of course, those were the most wealth of richer people, and ministers, the way you got the ministers to get it.
You had the lawyers to get it, the minister to get it, and the papers to get it.
You were down to heaven, but they were really focusing on people.
But again, that business of the best ability to pay the tax, that was what he did.
One of the...
...example, and it sounds pretty good.
Well, it really caused the colonies to get mad. I mean, they were really mad.
And they formed into groups called the Sons of Liberty.
And they would parade through the streets of New York and in all the major cities,
even down in the South and Charleston, the Sons of Liberty with their placards and everything,
and it would be liberty, property, and no stamps. They got that from the Dutch.
A Strange Scheme of Late Has Been Formed in the State by a Not-A-Political Maze, who in secret rejoiced that the Parliament's voice has condemned us by law to be slaves.
With the beasts of the woods we will ramble for food and lodge in wild deserts and caves and live porous job on the skirts of the globe before we'll submit to be slaves, boys, before we'll submit to be slaves.
was just a form of slavery, and as Benjamin Franklin said, that they would approve everything except, of course, an internal tax, and that was what the Stamp Act was.
The British government threw in the towel.
They said, okay, if you won't take stamp taxes, then we'll give you external taxes.
And he spoke to the commons and said, we're just doing, when they adopted the township duties,
the duties, custom duties, we're just doing what Dr. Franklin said.
When he came here to argue the repeal of the Stamp Act.
So what's the problem?
Well, of course, when news got out
that they were going to have these custom duties, again,
the colonists were mad as hell.
And out of this particular thing came the Boston Tea Party.
Now, the Boston Tea Party, they still kind of enact that.
I think the Cato Institute in Washington
goes up to Boston a certain time of the year
and throws the T in the Boston Harbor today.
You know, to reenact it as a protest against taxes.
But like so many interesting events,
it really wasn't a tax matter.
The Boston Tea Party was not protesting
against a tax on tea.
What had really happened is that all the,
because of the embargo on British goods,
The American colonists were pretty well attached to Dutch tea.
And the Dutch would bring the tea in and smuggle it in,
but that didn't seem to be a problem.
Incidentally, just a side thought,
if you've ever gone to Washington and you've ever
gone to see the Declaration of Independence,
about all you can see in that stupid, excuse my expression,
in a cage they have at him is John Hancock,
because he signed it first.
and he was a notorious smuggler he was wanted by the British government for millions in taxes and he was a big trader out of Boston and one of the best in fact one of the stories is that one of the Custon's officers got on board a ship to search it and the seaman gathered him and locked him up in a hole some place while they were unloading all this wine and all he remembers hearing the clinking of
John Hancock was a notorious tax evader.
What was really happening is because of the Dutch Tea, the British government had the
tea came in from the British Indies and they would pay the duty on it up in London and
And then from that, it came on to the new world, so it was a major source.
And it so happened that many of the leaders in the cabinet, maybe even the Prime Minister,
were heavily invested in tea.
It was a good investment at the time.
And they couldn't sell the damn stuff because of the competition from the smuggled Dutch
tea.
Well, so what they did is they took off all the duties and reduced the price so low that
Why wouldn't the American housewives want to get the tea cheaper?
They say they wanted it. The consumer wanted it.
The best price.
Sure.
The best price. So where's the conflict?
Because it would put the merchants out of business that were handling the Dutch tea.
That's it.
And on top of that, to make matters more irritating, the British tea was going to be limited to
It was limited to those British merchants who had been loyal to Britain, so you couldn't all buy it.
If you were a tea merchant and you were selling Dutch tea, you couldn't buy this new tea.
It was only limited to those loyal to the British system.
In being on the part of one commercial interest against another, in a way, the Dutch seller of the tea rioted against the undersellers, the dumpers.
Yeah.
So it really wasn't a conflict with the British government.
Yeah, that's right. It was simply a boycott problem and a problem of a good way to dispose of all the surplus tea
and then put the Dutch merchants, Americans that were pro-Dutch merchants out of business,
because they couldn't buy the cheaper tea, because it was limited to just a little group of British merchants.
So this made everybody mad as hell. And people would drink a lot of tea in those days. So it was a major beverage.
So when they disguised themselves as Indians and they boarded the ship into Boston Harbor and they tossed all the tea over, you know,
well, this was just the wanton destruction of private property, you know, and those were days where property was respected.
Benjamin Franklin, all of them, said, look, we've got to compensate for this, you know, this was wrong.
But the British reacted in a very violent way and they proceeded to close the Boston Harbor,
They proceeded to hammer down on the colonies and they were going to send you in the redcoats.
You know, this really set off the revolution.
But one of the things that I thought was kind of cute about this particular problem was that we think that,
and we say that it was a protest against the tax on tea, but the tea, even with this itty-bitty tax,
The tax, and it wasn't itty-bitty tax, was nothing. The tax was relatively nothing. They could have had no tax at all, and it's still been a Boston Tea Party.
But how we twisted it from a trade problem to a tax problem become the symbol you can't tax tea is one of the amazing stories of history.
was right though, what there was, the existing merches got undercut. They didn't want Walmart
because they knew the existing merches would be in their pocketbook and so they didn't
run out.
Yeah, well that's exactly what it was. That was what the whole damn thing was all about,
to be honest. And yet we still go on to the Boston Tea Party and there was a tax on tea.
The tea tax was the pittance. It was really tiny. It was really funny.
The other thing that happened too was Governor Etcherson was really dumb because the other ones, they could leave, but he says you can't leave without paying the departure taxes.
We can't pay the departure taxes. We haven't got any money to sell these. So it was a Mexican standoff there. That was really dumb.
One of the great, I guess, patriarchs of the American Revolution was Patrick Henry.
I mean, we all remember in high school, give me liberty or give me death, you know.
Patrick Henry was a... he was not in favor of a big government. He's not in favor of the national government.
And when he heard that they had met in Philadelphia, and I just... he said, I smell a rat.
This famous speech that he gave of Give Me Liberty, Give Me Death When He Ended, the best part of the speech is in the middle.
And he says, there is no retreat but in submission and slavery. Here we get that slavery again.
Our chains are forged. Chains are what you forge around the ankles of a slave.
Their clanking may be heard on the plains of Boston, the war is inevitable and let it come, I repeat it, let it come.
And that was, I think, far more important than give me liberty or give me death.
If the British, I'm just curious, do you have any idea what percent of the British budget, the Crown's budget, was gained from taxing the colonies?
And I'm wondering if they've eliminated any overt taxes on the colonies, would not they still have, the crown still have prospered just because of the trade?
Oh yeah, this is what they call mercantilism, where the colonies produce the raw materials and they're a major market, and then the manufacturing goods from Britain come to the colonies.
They could have gotten along without any overt taxation.
Senator, while that war was in the United States...
to protect from the French, which is one of the arguments that was made.
He said, look, you're the luckiest guys in the world.
I mean, you've got the protection of the British Empire, you've got jobs for everybody, your
sons aren't conscripted and sent off to fight faraway wars, and you have the lowest taxes
imaginable.
Why can't you pay a few bucks to the British government for this war with France?
And what had happened is just on the eve of this, in London there had been riots because
one of the excise taxes was on cider.
And so we had these riots in London on the excise tax on cider and then they had to cancel
the excise tax and that's when they turned on the colonies.
Probably that excise tax riot may have been instrumental, but see the British guy named
Dr. Samuel Johnson wrote a book called Taxes, No Tyranny, and you probably still can get it.
He argued that every government has the right to claim funds from its citizens for their protection.
And that's just a fundamental right of sovereignty.
And all the British government was doing was exercising that right, because the Americans were benefiting from it.
They had 10,000 redcoats, states, and Americans, somebody had to feed them, and the British were pretty mad about it because they heard all these stories about how the Americans were so rich and everything, and they were making money off the British soldiers who were spending their money in the New World, and so they just thought they should pay a little tax, and one of the illustrations in the book where it shows two Englishmen sitting in a necessary house, you know what a necessary house is? It's Al House.
House. It was necessary. I had an interesting name. And it shows these two Englishmen, one
sitting on the pot on one side and he's reading Taxation No Tyranny. And the other guy is
ripping up the protest of the Continental Congress to the Parliament over taxes and
he's using it to wipe himself with. And then in the background is this picture of a tarned
The Declaration of Independence in 1776. They also passed a resolution to call for the creation of Articles of Confederation for the United States.
And those Articles of Confederation were drafted. The name of the country was to become the United States in Congress assembled.
They adopted the Spanish dollar. They had a lot of interesting things, but they put in that document that they could not tax.
Because that would defeat the purpose of the revolution, you know, the tax, particularly by an external authority.
So the Congress could not tax. And this thing was finally ratified in 1781.
And of course they didn't have any money. The chief financial officer was a guy named Robert Morris.
And he said, the Congress had the liberty of asking and doing everything, the states had the liberty of paying nothing, and when they will pay, into the national government, I'm going to call it that, is known only to him who knoweth all things.
But that was a problem. And, of course, the government tried to function and stumble around, and it was in terrible shape, and Madison was deeply concerned about it.
What are you going to do? You have to have taxing power. So nothing was happening. They called a convention in Philadelphia to see if they could amend the Articles of Confederation and give the government the power to tax.
And then some guy named Daniel Shea, he was an old veteran of the Revolutionary War, and a lot of his unhappy people up there in Massachusetts, they had a little bit of a riot, and it was called the Shea's Rebellion.
It wasn't really much. He got these old veterans together and they got their muskets and they were raising them because of how hard life had been because of all the debts that the states had because of the revolution.
As they approached the federal arsenal, or what there was of an old arsenal, a couple of cannons were fired and they all ran home.
Well, the press got a hold of this and made it into a big thing, and they said, look how weak this country is.
He said, well, the police force in general could defeat the United States in the battle.
And so then it spread, and everybody then got together and they sent delegates to Philadelphia.
They said, we really do have to do something.
So if it hadn't been for Daniel Shea and his ragged bunch of unhappy, you know, Revolutionary War veterans,
and they were getting to be old guys by now, they may never have had a Constitution.
So they all sent delegates to Philadelphia to draft the Constitution.
It has been praised by, I think Gladstone said it was the most marvelous document ever written by the hand of Ma'am.
It is a remarkable piece of work. It's just too bad we don't believe in it today as much as we should.
The main purpose there was to amend the Articles of Confederation and give the government the power to tax.
And the very first article says Congress will have the power to tax.
But the taxes had to be uniform throughout the United States.
And so that was the big argument, the big problem.
But when they got together, they decided, well, let's just start all over again.
And they created the Constitution. That was a little clever, tricky move, because the Articles of Confederation could only have been amended by unanimous action of all the states.
And they never made it. So they made it so that when three-fourths of the states approve it, then it's the law.
and the rest. I mean, they just, they're bootstraps. They changed the whole game plan.
It was also in that article that they gave the limited powers of Congress
and that was in theory the government was supposed to have.
The federal government is limited to certain specific things that it can do
and that the Tenth Amendment, as you know, that came later,
said that powers not expressed to the Congress are reserved to the people, but that didn't
seem to me good either.
We then have this new government and they decided to make Washington our first president
and he establishes the principle only two terms until Roosevelt came along and he made
four terms, so we changed that.
They then needed money, and they had a lot of debts.
And they really did have a lot of debts.
Did you know it took up until 1830 for America to pay off the Revolutionary War debts?
And a lady got in touch with me some time ago about her, I don't know, great-grandfather
or something, who was one of the early financiers from Europe of the American Revolution.
And he produced guns and all kinds of things and shipped them to Americans, you know, fight
the British.
and of course he never got paid, he died and they didn't have any money to pay him, even
after the Constitution was formed.
Well Hamilton comes along and he decides that we need an excise tax.
Now that's fighting words in those days, I mean there's probably nothing you could say
that would be more, because all these people that come from Britain, all these people come
from Europe, they hated an excise.
And then he said, well, the country drinks too much anyway, so we need a health measure
and we'll put a tax on whiskey.
And who could complain, a tax on whiskey, no big deal, it's like a syntax today on tobacco
or something.
Well, the farmers out in the West, particularly Western Pennsylvania, didn't think that was
the way, such a good deal.
They thought taxes had to be uniform in the United States, that's what the Constitution
And here we are, poor farmers in the airport out in the west trying to make a living and we're the only ones that are taxed.
So they organized their regiments and their groups and they were mad as hell and they killed a few people and they tarred and feathered.
There's some interesting pictures in that book particularly of them tarring and feathering tax men and sending them out.
They really had enough and it was just damn unfair.
The reason they got stuck with a tax is because they couldn't ship farm their wheat and their grain across to where the markets are, over on the east coast, because of the Appalachian Mountains and because the travel was so difficult and how could you make 10 wagon loads of grain and ship it over to Philadelphia or to the eastern coast?
They said, well, look, if we distill the wheat and the grain into whiskey, then it's small,
and then we can ship it across to the west, to the east coast.
And so that's what they did.
And it became a form of money.
They didn't have money, so they were also trading in whiskey, too.
It became the way they paid for things.
So this was what was really behind the poor whiskey rebellion, but it was a wonderful
and the whole thing because here on the frontier, these farmers rose up and revolted against an unjust tax, and they were damn right, they had a point, and when Jefferson was going for the presidency, sometime later it made it clear they were going to repeal the whiskey tax, well they had another tax in the meantime, and this one is interesting because I did some study on it, there was a guy named John Fries who was an auctioneer,
And they then came along with a whiskey tax, and they came off with a land tax, believe it or not.
One coming under the direct tax of porcelain among the states.
And they were sending out assessors and things to measure the homes and so forth, you know, for this assessment.
And I guess we're still in Pennsylvania, yeah.
And anyway, John Fries is an auctioneer, and so they grab some of these assessors and rough them up and run them out of town, and of course, at that time, John Adams was president, so he proceeded to send out the militia, and the militia arrested John Fries and all of his compatriots.
He's then tried for treason. He's then sentenced to be shot or be hung, executed for treason.
He then applies to the President of the United States, John Adams, for pardon.
And this is Alexander Hamilton's tax. You know, he thinks this is really a good deal.
Yes?
How can dividing the tax be treason?
Because they roughed up the tax guys, and that was war against the United States.
It wasn't a logical case.
In fact, the judge who did this really railroaded this guy.
I mean, he really railroaded him.
He just instructed, in fact, so much so that his lawyer quit,
and said I'm not going to have anything to do with this court proceeding.
I'm not sure I can think of the name of who that guy was because a few years later there was an attempt to impeach him, the judge, because he was a tough cookie.
And why I know a little bit about this is that the Chief Justice of the United States, Reinquist or whatever the name is, I hate the guy.
Anyway, he wrote an article and he discussed these impeachment proceedings against the judge and that it was a wonderful thing that he didn't get impeached.
impeached and I wrote in a letter to the publisher and I said that was the worst thing that ever
happened.
They should have impeached that guy.
He was a despicable judge and it's no virtue to keep guys like that on the bench.
So they published my thing and I said then Chief Justice is all wet for what she was.
Anyway, it went up before the cabinet of John Adams for a pardon.
And the cabinet voted to uphold the conviction and execute John Fries.
And John Adams signed, said, sorry, fellas, I'm going to let this guy out.
I'm going to pardon him.
He said that wasn't treason.
That was just a little riot. That's all it was. Which is really what it all was.
But Hamilton and his bunch, they wanted to nail this guy to establish the strength of the national government.
They were always trying to find some way to hang their hat on it.
Thus we had Fry's Rebellion. So we had three rebellions in this period.
We had Shay's Rebellion, which was nothing, but had recurred and had never been a constitution.
Then we had the Whiskey Rebellion, which was really a real first-class rebellion.
But see, those people in the Whiskey Rebellion, when they finally threw in the towel, George Washington pardoned them all, he granted them all amnesty, so nobody was executed.
And they did create war against the United States, you know, they were an angry bunch.
Not just Tar and Featherman, there were a few people who got killed.
Well, and then we had Fry's Rebellion, which was only interesting to me, well it was against
the tax, no question about that, but because of the attempt to execute the guy for treason
against the United States, all it was was a riot.
So John Adams, even though he has the name Adams, he's pretty good president, my good.
I think the interesting thing is that here in 1798, you have a direct tax by the Federal Government on private property.
I did not even know this existed until I ran across it during my ancestor, who had a farm in Massachusetts, and I saw this tax bill from the Federal Government.
It wasn't small.
And that's how you picked it up in your book, of course, that it was a direct tax. But to my knowledge, that's the first direct tax in the Middle Ages building up to the middle of the war.
Well, I guess we kind of come up through, well, I covered just what I wanted to.
Maybe I'll set the stage for the Civil War, I think we'll talk about that this afternoon.
The government, of course, operated pretty much on custom duties, which was what they
had in design anyway, and the tariff began in around 1816, because we had the war with
Britain again, and there was some need now to have our own industries, and so they adopted
a little protective tariff at that time, the South was in favor of it, and that particular
The Tariff set the stage for the American Civil War.
There's a lot of, I've had a lot of static on that issue, but I've also had some support.
I'm not the first one that said that the Civil War was over economic issues.
It was.
And very much so at the time, the one guy that said a lot about it was Charles Dickens.
And he wrote a couple articles in which he said that I will tell you this week what the
war is not about, and I'll tell you next week what the war is really about.
And his comment was beautifully written.
He said, Union means so many millions a year lost to the South, secession means the loss
of the same millions to the North.
The love of money is the root of this as of many, many other evils.
The quarrel between the North and the South is as it stands solely a fiscal quarrel.
Not a word of slavery in there.
Charles Dickens, you know, a pretty outstanding guy, you know, one of the great minds. In fact, somebody wrote a book about him and called him the last great man, and he was in everything.
And this was a journal that he published along with everything else. And if you go into many side bookstores, you'll see Dickens' books, you know, all of the wonderful books that he wrote.
So, we have Charles Dickens on our side, and we'll discuss a little bit of the tariff.
I didn't want to get into it today, but I just whet your appetites with that.
I remember when I first wrote about that some years ago, I was in Arizona at the time, and
a fellow called me up and heard about me, and he said, can I have lunch with you?
And I said, sure.
And so, I went down to Phoenix, and we had lunch, and he said, well, you know, I read
I read your article on the tariff, when taxes goes in the Civil War, it reminded me of my university days when my American history professor told me that the Civil War was not over slavery, it was over taxes.
And he says, I still remember that, and it's always been a slave battle, a slave issue.
So it was fun to find out that there's still a few people that know how to think and accept
history for what it is, but we'll talk about it.
I'm going to kind of let you guys, any questions you have about the early days?
Yeah?
I've heard some commentary, and I can't remember where it came from.
It's about the World Bankers at the time.
And they had known England as one of some of the other countries for many.
And they were putting a squeeze on England to pay the money back for the interests of maybe both.
About the time that England decided to try to get more taxation from the colonies, similar to what the international monetary system is doing now to Argentina, Brazil, and...
So you're going back to the American Revolution then, right?
Right.
It just seems that throughout history the sort of bottom line justification for government taxation is so that it can defend the people against foreign enemies.
The only defensive war the U.S. has ever fought was financed privately.
was financed privately. When you were talking about all the debts that the U.S. colonies owed, they didn't tax to finance.
Which war are you talking about?
The Revolutionary War.
Oh, the Revolutionary War, yeah.
So that sort of seems to give the lie to that claim that taxes are necessary to defend against foreign entities. I'm just wondering if you have any comments.
Well, that's what the constitution, you know, for a common defense, was what you could spend money for.
And it's talking about taxes. It says they should spend for the common defense.
But that's not how it's been used.
Pardon?
But that's not how it's been used.
No. Yeah.
When income tax come about because the constitution doesn't save anybody, income tax...
Well, I'll talk about that, but not right now. We'll save that.
How did the banking transactions and the trade transactions, the financing, the American enterprise take place?
Do you have any insight into that?
So these plantation owners had access to banks to finance their money?
And of course, Europe was a big lender into the Americas too, all through this period when the great sources of capital investment, well, it would be the banks, you know, it wasn't governments, America was a very lucrative place, a very profitable place, I mean, that's why the money went there.
When I get home, I'm going to try to find this reference and I'm going to send it to you, but Dickens, one can make the case that Dickens is not, is a 100% great guy as you think.
You know, that seems to happen with so many of our heroes, you know.
In the debate over slavery in England, there were two factions fighting each other, and it's surprising.
Diggins and a bunch of authors were on the side of retaining slavery, and one of the cretins with him was the guy who coined the phrase,
and Discipline Assignments Against Economists, and on the other side, advocating for gain rid of slavery were Darwin, the Evangelicals, and economists, and people in business.
How about John Stuart Mill?
Yeah, in that.
So, you know, Dickens was on the long side sometimes.
Well, he did write some articles. He did write a journal, and in it he had an article on slavery. He was pretty hostile to it.
I actually put that in my new book that I'm doing, my latest, maybe my last project.
I'm collecting foreign journals on the Civil War, and I've been doing it for about two, three years now.
I'm into the French and the German, and these people really had an insight into the war that Americans never had.
They really sought for what it was, but they didn't have any problem.
Here you couldn't say anything without ending up in jail, if you did.
So it's interesting.
And he did, I found to think of what the name of that journal was, Household Words or something, published around in the 1850s.
And he talks about slavery. Well, it wasn't too complimentary. He was one, along with many, that said if the South was successful, that slavery would end sooner than if they stayed in the Union.
And that was a fairly common view in Europe, that if the South succeeded, slavery would end sooner than if they stayed in the Union.
You might want to let that tickle your mind a little bit, because if they were fighting for slavery, that didn't make any sense.
But if they weren't fighting for slavery, then maybe it does make some sense.
What is the difference between fees and tax? Because nowadays everything is named fees instead of tax.
Well, you can call a tax anything. You remember Margaret Thatcher called it a community tax.
Well, fees are just forms of tax. Like you get on the highway and they charge you duty, you know, on the turnpikes and stuff. You can tell you whatever you want to.
It's a fee, like lawyers have their annual fee that they have to pay to the Bar Association. It's still a tax.
So it's public in order to make it better?
Regarding a stamp tax, when I was a kid in Canada, you required a stamp on a check.
Yeah, I've seen that in other countries. I've seen a stamp on a check, yeah.
Well, when I got old enough to write checks, it had been done.
Yeah, no, I've seen that. In fact, I think the Dutch had that.
Yeah, no, it was common. The stamp tax was a really good idea, a way to raise revenue.
and you had to, I remember when I used to, with Lawyer and I read deeds they have to record and I'd have to go down to the post office and buy so many revenue stamps and stick them on the deeds and then you recorded it and it showed you paid the tax.
I think it was not a bad idea myself, but they got rid of it because it was easier just to make an income tax and just raise the rates and hammer on everybody, it worked better, just one tax that would do the job.
Tomorrow morning you're going to talk about current taxation and current ideas?
Tomorrow I'm going to talk about the income tax and its history and where it is today and the federal state tax, things like that.
You talk about alternate schemes and ideas.
Well yeah, I'm always interested in listening to some of the new ones because the national sales tax is a real popular idea.
And I told you about the one tax guy I have, a lot of possibilities out there.
I think that if we can do all the wonderful things we can technologically, why can't we
have a good tax system using our wits, you know, in some way, and get away from all the
abuse and problems that we have under the current tax laws and systems.
There are no good taxes.
Well, what did Pope say, whoever hopes a faultless tax to see, hope what never was and there will be.
That was 1750, something like that.
My own experience with taxes have been, if the rates are low and reasonable, people will pay it.
You can call it anything you want to, but people will pay it if the rates are low.
Why is it that the rate is 0%?
These guys in the Congress, and you really get discouraged.
I mean, they're really something.
They're really numbers.
When I spoke to the House Ways and Means Committee, I had a rangle, I asked them with Charlie
Rangel, and that was interesting, and he's the head-ranking Democrat, so if the Democrats
win the House, he's going to be the chairman of the House Ways and Means Committee.
I think the answer is, you remember Oswald who murdered President Kennedy?
Yeah, well the question is where is Oswald now that we need him?
I can't take credit for that, my friends.
Oh, gosh. Wow. See that revolution every 20 years. I just want to stay out of the Civil War, and we're going to the Civil War this afternoon, and I think that's a nice subject, and I think being here in the South, you'll have a lot to say about it. I think you should have a lot to say about it.
And if it was a major tax event, then that's a little different twist than everybody's
getting today.
I think people want to see the Civil War as bad guys and good guys, and the South is the
bad guy, and the Northerners is the good guys, but they don't realize that the Northerners
hated the black people much worse than the South ever possibly hated the black people.
And that was well known. Up there they were lepers. In fact, so much so that they didn't want to touch them, you know, the skin, the black skin, you know, the feeling of, I might rub up on them or something.
And that was in the North. And they had those terrible race riots, as you might know, up in New York, in which probably the most massive lynching of black in American history took place in New York in 1863.
That's a good trivia question that's laid on the big book of columns. I asked which state held the record for illegal lynchings of blacks when it was in New York?
Did they tax banks and money flows and things like that back in this period?
Bankers pretty much had a free brain. Free flow of capital.
The Federal Reserve was the birthplace of the Internal Revenue Service, and their job was to enforce the tax on whiskey and a lot of people got killed in that.
Well, I live next to the lake between the lakes, and that's why the Federal government bought that out, because they couldn't get rid of moonshine.
Yeah, yeah.
They'd probably give it there in the 60s and 50s and just bought it all up. Didn't ask them for it.
There was one old guy who was being let off the jail for making moonshine. He said,
Well, my grandpappy fit in the revolution, and I can't understand why I just can't make a little muncher.
Isn't that what he fit for?
And his hillbilly jargon.
You know, one of the reasons for the Shades Rebellion, you know, there were all the debts from the Revolutionary War and most of the soldiers who were having to pay it back,
so if you were a veteran, they were only going to collect, you know, 20 cents on the dollar at most of the states, except Massachusetts.
Massachusetts was held by only six families. They bought all the debts. One of which, by the way, was Adam's.
And so they were going to collect one dollar for the Confederates, I mean for the Continentals.
They weren't going to have a discount. That was one of the things that really got Shade's outrage,
because he knew what the other states were doing in forgiving part of the debt, and they wouldn't do it.
And then Adam wanted to get Washington and the other states to come in and help their militia, and we're going to do that.
So then they decided, well, they're going to make a stronger constitution where the individual militias would not be just them responsible.
We're going to get other people to come in and take the back.
Well, that's interesting. Thank you.
Any other interesting observations on this period?
I'll let you go then, okay.