-Caveat Lector-
Subject: [ThePentagonGuru] Claim . . . Reclaim !
Date: Sat, 29 May 1999 13:29:02 -0500
From: "Alan Bacon" <[EMAIL PROTECTED]>
Reply-To: [EMAIL PROTECTED]
To: <[EMAIL PROTECTED]>
The Commercial Credit System
When Congress borrows money on the credit of the United
States,
bonds are thus legislated into existence and deposited as
credit
entries in Federal Reserve banks. United States bonds, bills
and
notes constitute money as affirmed by the Supreme Court
(Legal
Tender Cases, 110 U.S. 421), and this money when deposited
with
the Fed becomes collateral from whence the Treasury may
write checks
against the credit thus created in its account (12 USC 391).
For example, suppose Congress appropriates an expenditure of
$1
billion. To finance the appropriation Congress creates the
$1
billion worth of bonds out of thin air and deposits it with
the
privately owned Federal Reserve System. Upon receiving the
bonds,
the Fed credits $1 billion to the Treasury's checking
account,
holding the deposited bonds as collateral. When the United
States
deposits its bonds with the Federal Reserve System, private
credit
is extended to the Treasury by the Fed.
Under its power to borrow money, Congress is authorized by
the
Constitution to contract debt, and whenever something is
borrowed
it must be returned. When Congress spends the contracted
private
credit, each use of credit is debt which must be returned to
the
lender or Fed. Since Congress authorizes the expenditure of
this
private credit, the United States incurs the primary
obligation to
return the borrowed credit, creating a National Debt which
results
when credit is not returned.
However, if anyone else accepts this private credit and uses
it to
purchase goods and services, the user voluntarily incurs the
obligation
requiring him to make a return of income whereby a portion
of the income
is collected by the IRS and delivered to the Federal Reserve
bankers.
Actually the federal income tax imparts two separate
obligations:
the obligation to file a return and the obligation to abide
by the
Internal Revenue Code. The obligation to make a return of
income for
using private credit is recognized in law as an irrecusable
obligation,
which according to 'Bouvier's Law Dictionary' (1914 ed.), is
"a term
used to indicate a certain class of contractual obligations
recognized
by the law which are imposed upon a person without his
consent and
without regard to any act of his own."
This is distinguished from a recusable obligation which,
according to
Bouvier, arises from a voluntary act by which one incurs the
obligation
imposed by the operation of law. The voluntary use of
private credit
is the condition precedent which imposes the irrecusable
obligation to
file a tax return. If private credit is not used or
rejected, then the
operation of law which imposes the irrecusable obligation
lies dormant
and cannot apply. In 'Brushaber v. Union Pacific RR Co.' 240
U.S. 1
(1916) the Supreme Court affirmed that the federal income
tax is in the
class of indirect taxes, which include duties and excises.
The personal
income tax arises from a duty -- i.e., charge or fee --
which is
voluntarily incurred and subject to the rule of uniformity.
A charge is
a duty or obligation, binding upon him who enters into it,
which may be
removed or taken away by a discharge (performance):
'Bouvier', p. 459.
Our federal personal income tax is not really a tax in the
ordinary
sense of the word but rather a burden or obligation which
the taxpayer
voluntarily assumes, and the burden of the tax falls upon
those who
voluntarily use private credit. Simply stated the tax
imposed is a
charge or fee upon the use of private credit where the
amount of private
credit used measures the pecuniary obligation. The personal
income tax
provision of the Internal Revenue Code is private law rather
than public
law. "A private law is one which is confined to particular
individuals,
associations, or corporations": 50 AmJur 12, p.28. In the
instant case
the revenue code pertains to taxpayers. A private law can be
enforced by
a court of competent jurisdiction when statutes for its
enforcement are
enacted: 20 AmJur 33, pgs. 58, 59. The distinction between
public and
private acts is not always sharply defined when published
statutes are
printed in their final form: Case v. Kelly 133 U.S. 21
(1890). Statutes
creating corporations are private acts: 20 AmJur 35, p. 60.
In this connection, the Federal Reserve Act is private law.
Federal Reserve
banks derive their existence and corporate power from the
Federal Reserve
Act: Armano v. Federal Reserve Bank 468 F.Supp 674 (1979). A
private act
may be published as a public law when the general public is
afforded the
opportunity of participating in the operation of the private
law. The
Internal Revenue Code is an example of private law which
does not exclude
the voluntary participation of the general public. Had the
Internal
Revenue Code been written as substantive public law, the
code would be
repugnant to the Constitution, since no one could be
compelled to file
a return and thereby become a witness against himself. Under
the fifty
titles listed on the preface page of the United States Code,
the Internal
Revenue Code (26 USC) is listed as having not been enacted
as substantive
public law, conceding that the Internal Revenue Code is
private law.
Bouvier declares that private law "relates to private
matters which do
not concern the public at large." It is the voluntary use of
private
credit which imposes upon the user the quasi contractual or
implied
obligation to make a return of income. In 'Pollock v.
Farmer's Loan &
Trust Co.' 158 U.S. 601 (1895) the Supreme Court had
declared the income
tax of 1894 to be repugnant to the Constitution, holding
that taxation
of rents, wages and salaries must conform to the rule of
apportionment.
However, when this decision was rendered, there was no
privately owned
central bank issuing private credit and currency but rather
public
money in the form of legal tender notes and coins of the
United States
circulated.
Public money is the lawful money of the United States which
the
Constitution authorizes Congress to issue, conferring a
property right,
whereas the private credit issued by the Fed is neither
money nor property,
permitting the user an equitable interest but denying
allodial title.
Today, we have two competing monetary systems. The Federal
Reserve System
with its private credit and currency, and the public money
system
consisting of legal tender United States notes and coins.
One could use
the public money system, paying all bills with coins and
United States
notes (if the notes can be obtained), or one could
voluntarily use the
private credit system and thereby incur the obligation to
make a return
of income. Under 26 USC 7609 the IRS has carte blanche
authority to summon
and investigate bank records for the purpose of determining
tax liabilities
or discovering unknown taxpayers: 'United States v. Berg'
636 F.2d 203
(1980).
If an investigation of bank records discloses an excess of
$1000 in deposits
in a single year, the IRS may accept this as prima facie
evidence that the
account holder uses private credit and is therefore a person
obligated to
make a return of income. Anyone who uses private credit --
e.g., bank
accounts, credit cards, mortgages, etc. -- voluntarily plugs
himself into
the system and obligates himself to file. A taxpayer is
allowed to claim
a $1000 personal deduction when filing his return. The
average taxpayer
in the course of a year uses United States coins in vending
machines,
parking meters, small change, etc., and this public money
must be deducted
when computing the charge for using private credit. On June
5, 1933, the
day of infamy arrived. Congress on that date enacted House
Joint Resolution
192, which provided that the people convert or turn in their
gold coins in
exchange for Federal Reserve notes.
Through the operation of law, H.J.R. 192 took us off the
gold standard and
placed us on the dollar standard where the dollar could be
manipulated by
private interests for their self-serving benefit. By this
single act the
people and their wealth were delivered to the bankers. When
gold coinage
was thus pulled out of circulation, large denomination
Federal Reserve notes
were issued to fill the void. As a consequence the public
money supply in
circulation was greatly diminished, and the debt-laden
private credit of
the Fed gained supremacy. This action made private
individuals who had been
previously exempt from federal income taxes now liable for
them, since the
general public began consuming and using large amounts of
private credit.
Notice all the case law prior to 1933 which affirms that
income is a profit
or gain which arises from a government granted privilege.
After 1933,
however, the case law no longer emphatically declares that
income is
exclusively corporate profit or that it arises from a
privilege.
So, what changed? Two years after H.J.R. 192, Congress
passed the Social
Security Act, which the Supreme Court upheld as a valid act
imposing a
valid income tax: 'Charles C. Steward Mach. Co. v, Davis'
301 U.S. 548
(1937). It is no accident that the United States is without
a dollar unit
coin. In recent years the Eisenhower dollar coin received
widespread
acceptance, but the Treasury minted them in limited number
which encouraged
hoarding. This same fate befell the Kennedy half dollars,
which circulated
as silver sandwiched clads between 1965-1969 and were
hoarded for their
intrinsic value and not spent.
Next came the Susan B. Anthony dollar, an awkward coin which
was instantly
rejected as planned. The remaining unit is the privately
issued Federal
Reserve note unit dollar with no viable competitors. Back in
1935 the Fed
had persuaded the Treasury to discontinue minting silver
dollars because
the public preferred them over dollar bills. That the public
money system
has become awkward, discouraging its use, is no accident. It
was planned
that way. A major purpose behind the 16th Amendment was to
give Congress
authority to enforce private law collections of revenue.
Congress had the
plenary power to collect income taxes arising from
government granted
privileges long before the 16th Amendment was ratified, and
the amendment
was unnecessary, except to give Congress the added power to
enforce
collections under private law: i.e., income from whatever
source.
So, the Fed got its amendment and its private income tax,
which is a
banker's dream but a nightmare for everyone else. Through
the combined
operation of the Fed and H.J.R. 192, the United States pays
exorbitant
interest whenever it uses its own money deposited with the
Fed, and the
people pay outrageous income taxes for the privilege of
living and
working in their own country, robbed of their wealth and
separated from
their rights, laboring under a tax system written by a cabal
of loan
shark bankers and rubber stamped by a spineless Congress.
Congress has
the power to abolish the Federal Reserve System and thus
destroy the
private credit system. However, the people have it within
their power to
strip the Fed of its powers, rescind private credit and get
the bankers
to pay off the National Debt should Congress fail to act.
The key to all this is 12 USC 411, which declares that
Federal Reserve
notes shall be redeemed in lawful money at any Federal
Reserve bank. Lawful
money is defined as all the coins, notes, bills, bonds and
securities of
the United States: 'Julliard v. Greenman' 110 U.S. 421, 448
(1884); whereas
public money is the lawful money declared by Congress as a
legal tender
for debts (31 USC 5103); 524 F.2d 629 (1974). anyone can
present Federal
Reserve notes to any Federal Reserve bank and demand
redemption in public
money -- i.e., legal tender United States notes and coins. A
Federal
Reserve note is a fixed obligation or evidence of
indebtedness which pledges
redemption (12 USC 411) in public money to the note holder.
The Fed
maintains
a ready supply of United States notes in hundred dollar
denominations for
redemption purposes should it be required, and coins are
available to
satisfy
claims for smaller amounts.
However, should the general public decide to redeem large
amounts of private
credit for public money, a financial melt-down within the
Fed would quickly
occur. The process works like this. Suppose $1000 in Federal
Reserve notes
are presented for redemption in public money. To raise $1000
in public money
the Fed must surrender U.S. Bonds in that amount to the
Treasury in exchange
for the public money demanded (assuming that the Fed had no
public money on
hand). In so doing $1000 of the National Debt would be paid
off by the Fed
and thus cancelled.
Can you imagine the result if large amounts of Federal
Reserve notes were
redeemed on a regular, ongoing basis? Private credit would
be withdrawn from
circulation and replaced with public money, and with each
turning of the
screw
the Fed would be obliged to pay off more of the National
Debt. Should the
Fed refuse to redeem its notes in public money, then the
fiction that
private
credit is used voluntarily would become unsustainable. If
the use of private
credit becomes compulsory, then the obligation to make a
return of income is
voided. If the Fed is under no obligation to redeem its
notes, then no one
has
an obligation to make a return of income. It is that simple!
Federal Reserve notes are not money and cannot be tendered
when money is
demanded: 105 So. 305 (1925). Moreover, the Ninth Circuit
rejected the
argument that a $50 Federal Reserve note be redeemed in gold
or silver coin
after specie coinage had been rescinded but upheld the right
of the note
holder to redeem his note in current public money (31 USC
392; rev., 5103):
524 F.2d 629 (1974); 12 USC 411. It would be advantageous to
close out all
bank accounts, acquire a home safe, settle all debts in cash
with public
money and use U.S. postal money orders for remittances.
Whenever a check is
received, present it to the bank of issue and demand cash in
public money.
This will place banks in a vulnerable position, forcing them
to draw off
their
assets.
Through their insatiable greed, bankers have over extended,
making banks
quite
illiquid. Should the people suddenly demand public money for
their deposits
and for checks received, many banks will collapse and be
foreclosed by those
demanding public money. Banks by their very nature are
citadels of usury and
sin, and the most patriotic service one could perform is to
obligate bankers
to redeem private credit. When the first Federal Reserve
note is presented
to
the Fed for redemption, the process of ousting the private
credit system
will
commence and will not end until the Fed and the banking
system nurtured by
it
collapse.
Coins comprise less than five percent of the currency, and
current law
limits
the amount of United States notes in circulation to $300
million (31 USC
5115).
The private credit system is exceedingly over extended
compared with the
supply
of public money, and a small minority working in concert can
easily collapse
the
private credit system and oust the Fed by demanding
redemption of private
credit.
If the Fed disappeared tomorrow, income taxes on wages and
salaries would
vanish
with it. Moreover, the States are precluded from taxing
United States notes:
4 Wheat. 316.
According to Bouvier, public money is the money which
Congress can tax for
public
purposes mandated by the Constitution. Private credit when
collected in
revenue
can fund programs and be spent for purposes not cognizable
by the
Constitution.
We have in effect two competing governments: the United
States Government
and
the Federal Government. The first is the government of the
people, whereas
the
Federal Government is founded upon private law and funded by
private credit.
What we really have is private government. Federal agencies
and activities
funded
by the private credit system include Social Security, bail
out loans to
bankers
via the IMF, bail out loans to Chrysler, loans to students,
FDIC, FBI,
supporting the U.N., foreign aid, funding undeclared wars,
etc., all of
which
would be unsustainable if funded by taxes raised pursuant to
the
Constitution.
The personal income tax is not a true tax but rather an
obligation or burden
which is voluntarily assumed, since revenue is raised
through voluntary
contributions and can be spent for purposes unknown to the
Constitution.
Notice how the IRS declares in its publications that
everyone is expected
to contribute his fair share. True taxes must be spent for
public purposes
which the Constitution recognizes. Taxation for the purpose
of giving or
loaning money to private business enterprises and
individuals is illegal:
15 AmRep 39; Cooley, 'Prin. Const. Law', ch. IV.
Revenue derived from the federal income tax goes into a
private slush fund
raised from voluntary contributions, and Congress is not
restricted by the
Constitution when spending or disbursing the proceeds from
this private
fund.
It is incorrect to say that the personal federal income tax
is
unconstitutional,
since the tax code is private law and resides outside the
Constitution.
The Internal Revenue Code is non-constitutional because it
enforces an
obligation which is voluntarily incurred through an act of
the individual
who binds himself.
Fighting the Internal Revenue Code on constitutional grounds
is wasted
energy.
The way to bring it all down is to attack the Federal
Reserve System and its
banking cohorts by demanding that private credit be
redeemed, or by
convincing
Congress to abolish the Fed. Never forget that private
credit is funding the
destruction of our country. [Reprinted from `Freedom
League', Sept/Oct 1984]
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