We had a server outage, and we're rebuilding the site. Some of the site features won't work. Thank you for your patience.
imc indymedia

Los Angeles Indymedia : Activist News

white themeblack themered themetheme help
About Us Contact Us Calendar Publish RSS
latest news
best of news




A-Infos Radio

Indymedia On Air

Dope-X-Resistance-LA List


IMC Network:

Original Cities

www.indymedia.org africa: ambazonia canarias estrecho / madiaq kenya nigeria south africa canada: hamilton london, ontario maritimes montreal ontario ottawa quebec thunder bay vancouver victoria windsor winnipeg east asia: burma jakarta japan korea manila qc europe: abruzzo alacant andorra antwerpen armenia athens austria barcelona belarus belgium belgrade bristol brussels bulgaria calabria croatia cyprus emilia-romagna estrecho / madiaq euskal herria galiza germany grenoble hungary ireland istanbul italy la plana liege liguria lille linksunten lombardia london madrid malta marseille nantes napoli netherlands nice northern england norway oost-vlaanderen paris/Île-de-france patras piemonte poland portugal roma romania russia saint-petersburg scotland sverige switzerland thessaloniki torun toscana toulouse ukraine united kingdom valencia latin america: argentina bolivia chiapas chile chile sur cmi brasil colombia ecuador mexico peru puerto rico qollasuyu rosario santiago tijuana uruguay valparaiso venezuela venezuela oceania: adelaide aotearoa brisbane burma darwin jakarta manila melbourne perth qc sydney south asia: india mumbai united states: arizona arkansas asheville atlanta austin baltimore big muddy binghamton boston buffalo charlottesville chicago cleveland colorado columbus dc hawaii houston hudson mohawk kansas city la madison maine miami michigan milwaukee minneapolis/st. paul new hampshire new jersey new mexico new orleans north carolina north texas nyc oklahoma philadelphia pittsburgh portland richmond rochester rogue valley saint louis san diego san francisco san francisco bay area santa barbara santa cruz, ca sarasota seattle tampa bay tennessee urbana-champaign vermont western mass worcester west asia: armenia beirut israel palestine process: fbi/legal updates mailing lists process & imc docs tech volunteer projects: print radio satellite tv video regions: oceania united states topics: biotech

Surviving Cities

www.indymedia.org africa: canada: quebec east asia: japan europe: athens barcelona belgium bristol brussels cyprus germany grenoble ireland istanbul lille linksunten nantes netherlands norway portugal united kingdom latin america: argentina cmi brasil rosario oceania: aotearoa united states: austin big muddy binghamton boston chicago columbus la michigan nyc portland rochester saint louis san diego san francisco bay area santa cruz, ca tennessee urbana-champaign worcester west asia: palestine process: fbi/legal updates process & imc docs projects: radio satellite tv
printable version - js reader version - view hidden posts - tags and related articles

States Rights Vs. Monetary Monopoly

by C/O Diogenes Saturday, May. 10, 2003 at 6:33 AM

The advantage we once had is that with decentralized Government tyranny in one part of the country could be limited to that part of the country. With the abolition of states rights we are left with a powerful central government which is increasingly tyrannical.

The federal government today can wage wars without the consent of our congressional representatives, overthrow foreign governments, tax nearly half of national income, abolish civil liberty in the name of "homeland security" and "the war on drugs," legalize and endorse infanticide ("partial-birth abortion"), regulate nearly every aspect of our existence, and there’s little or nothing we can do about it. "Write your congressman" is the refrain of the slave to the state who doesn’t even realize he’s a slave (thanks to decades of government school brainwashing).

But Americans were not always slaves to federal tyranny. Perhaps the best illustration of this is how Americans once utilized the Jeffersonian, states’ rights traditions of nullification and interposition to assist President Andrew Jackson in his campaign to veto the re-chartering of the Second Bank of the United States (BUS) in 1832. Jackson essentially ended central banking in America until it was revived thirty years later by the Lincoln administration. The story is told in James J. Kilpatrick’s wonderful 1957 book, The Sovereign States: Notes of a Citizen of Virginia.

The Bank was notorious for fraud, mismanagement, corruption, and attempts to engineer a "political business cycle." Prior to 1861, the American people were still sovereign over their government. They exercised that sovereignty in the way the founders intended: through state political conventions or legislatures. The federal government was their agent.

Consequently, as early as 1816, Indiana and Illinois amended their state constitutions to prohibit the BUS from establishing branches within their jurisdictions. North Carolina, Georgia, and Maryland imposed heavy taxes on BUS branches within their states in attempts to tax them out of existence (A tax that even libertarians could love!). Knowing that such taxes could destroy the central bank, the federal government brought suit in Maryland (McCulloch vs. Maryland), confident that John Marshall, chief justice of the Supreme Court and a proponent of the BUS, would rule in its favor. He did, coining the famous phrase that "the power to tax involves the power to destroy" in his decision. He wasn’t expressing a fear that taxation could destroy private initiative and private enterprise, but that it could limit the federal government’s monetary monopoly.

Despite Marshall’s opinion that state taxes on the BUS were unconstitutional, numerous states continued to harass the bank. Until 1865, the Supreme Court’s opinion was just the Supreme Court’s opinion. The citizens of the states reserved the right to offer their own opinions on constitutionality, which they often considered to be every bit as valid as the Court’s. The same was true of certain presidents: Andrew Jackson essentially said "thank you for your opinion" and then thumbed his nose at the Court when it ruled that the BUS was constitutional.

After Marshall’s 1819 opinion, Ohio enacted a $50,000 per year tax on the BUS. The Bank refused to pay, so the Ohio state auditor ordered a deputy, one John L. Harper, to collect the tax. As Kilpatrick (p. 151) explains it:

[O]n the morning of September 17, Harper made one last request for voluntary payment. When this was denied, he leaped over the counter, strode into the bank vaults, and helped himself to $100,000 in paper and specie. He then turned this over to a deputy . . . stuffing this considerable hoard into a small trunk, with which the party thoughtfully had come equipped . . .

This would be the equivalent of today’s governor of Ohio ordering state troopers to enter the Cleveland Fed and strip its vaults of over a million dollars. The BUS sued Ohio, relying on Marshall’s opinion. The Ohio legislature considered such a lawsuit to be a threat to citizen sovereignty and a dangerous precedent to all Americans, not just Ohioans. It issued a statement saying, "To acquiesce in such an encroachment upon the privileges and authority of the States, without an effort to defend them, would be an act of treachery to the State itself, and to all the States that compose the American Union (emphasis added)."

The legislature stated that it was aware of the theory that the Supreme Court is to be the interpreter of the Constitution, but declared that "to this doctrine . . . they can never give their assent" (Kilpatrick, p. 152). The legislature quoted Jefferson’s Kentucky Resolve of 1798, which said that "as in all other cases of compact among parties having no common judge," each party "has an equal right to interpret the Constitution for themselves, where their sovereign rights are involved . . ."

Marshall was wrong, the Ohioans said, because his opinion unconstitutionally encroached upon the sovereignty of the states. Therefore, they were under no obligation to acquiesce in his ruling.

The Ohio legislature promised to return the $100,000 if the BUS left the state. If not, it proposed a law forbidding "the keepers of our jails" from imprisoning any person "committed at the suit of the Bank of the United States"; prohibiting Ohio courts from "taking acknowledgements of conveyance where the Bank is a party"; and forbidding "our courts, justices of peace, judges and grand juries from taking any cognizance of any wrong alleged to have been committed upon any species of property owned by the Bank." Invoking Jefferson’s "Doctrine of ’98," the Ohioans concluded by "denouncing the Federal courts for violation of the Constitution" (p. 154).

The BUS persisted in its lawsuit, and eventually had the state treasurer arrested and imprisoned. While in prison, the keys to the state vaults were physically taken from him and the feds took back the $100,000, apparently still in the same trunk.

This act infuriated the Ohioans even more, and they continued to harass the Bank, as did many other states. Kentucky and Connecticut adopted Ohio’s states’ rights stand toward the Bank in 1825. In 1829, South Carolina imposed a tax on stockholders of the Bank within the state. New York and New Hampshire enacted resolutions urging that the Bank not be re-chartered. As Kilpatrick concludes:

In the face of this unrelenting warfare, the bank could not survive. Withdrawal of the public deposits began in August of 1833, under Jackson’s order; and when Pennsylvania governor Wolf, who had been one of the bank’s staunchest supporters, denounced the institution in . . . March of 1834, public opinion was fatally influenced against the bank. The Pennsylvania Senate adopted fresh resolutions urging that the bank ought not to be re-chartered. The following month, the United States House of Representatives adopted the same view, and the bank’s days came to an end (p. 157).

Andrew Jackson is usually given credit for (temporarily) ending central banking in America in the nineteenth century. But he had help. It was this expression of citizen sovereignty, in the spirit of the Jeffersonian states’ rights tradition, that made Jackson’s veto of the bank politically possible.

States’ rights as a check on the tyrannical proclivities of the central government ended in 1865, of course. As Forrest McDonald noted in States' Rights and the Union (p. 224), after Lincoln’s war the Supreme Court "became the sole and final arbiter of constitutional controversies. No longer could a Jefferson arise to insist that the other branches of the federal government had coequal authority to determine constitutionality. No more could a Calhoun arise to defend a doctrine of interposition or nullification."

The imperious Woodrow Wilson would celebrate this fact in his 1908 book, Constitutional Government in the United States, where he wrote (p. 178) that "the War between the States established . . . this principle, that the federal government is, through its courts, the final judge of its own powers."

In A View of the Constitution, published a century earlier, the Jeffersonian legal scholar St. George Tucker cited this phenomenon as the very definition of tyranny. If the federal government ever became the final judge of the limits of its own powers, Tucker warned, then constitutional liberty would become an empty phrase. The federal government would inevitably conclude that there are, in fact, no limits to its power.

May 9, 2003

Thomas J. DiLorenzo [send him mail] is the author of the LRC #1 bestseller, The Real Lincoln: A New Look at Abraham Lincoln, His Agenda, and an Unnecessary War (Forum/Random House, 2002) and professor of economics at Loyola College in Maryland.

Copyright © 2003 LewRockwell.com
Report this post as:
Share on: Twitter, Facebook, Google+

add your comments

Listed below are the 10 latest comments of 2 posted about this article.
These comments are anonymously submitted by the website visitors.
Are you free... Diogenes Saturday, May. 10, 2003 at 6:34 AM
politics and such Libertarians Saturday, May. 10, 2003 at 7:05 AM
© 2000-2018 Los Angeles Independent Media Center. Unless otherwise stated by the author, all content is free for non-commercial reuse, reprint, and rebroadcast, on the net and elsewhere. Opinions are those of the contributors and are not necessarily endorsed by the Los Angeles Independent Media Center. Running sf-active v0.9.4 Disclaimer | Privacy