-Caveat Lector-
The Most Successful Fraud in American History
by Gary North
27 March 2006
Before I identify what has to be the most successful fraud in
the history of the United States, I should first define my
terms.
Fraud: A deliberate attempt to deceive a targeted
victim, so as to obtain something of value from
him that would have been difficult to obtain, had
the victim known the truth.
Success: Securing an advantage for yourself and
your heirs that is almost impossible to lose, even
under competitive conditions.
I offer the following criteria as characteristics of a
successful fraud.
First, the perpetrator who designs the fraud and then
executes it is subsequently hailed by the victims as a hero, a
genius, and indispensable to their own well-being.
Second, the perpetrators must be bound by an oath of
non-disclosure, which all of them keep until they die, yet
which leaves no trail of paper for historians to discuss.
Third, the nature of the fraud is well known by critics, who
tell their story in full public view at the time the fraud is
committed, but a majority of the victims reject this story.
Fourth, the critics' negative assessment is forgotten over
time, leaving the victims' heirs convinced that the original
fraud was a great idea and well worth defending.
Fifth, anyone who discovers the true nature of the fraud
cannot gain a hearing because the heirs of the victims
dismiss him as a crackpot, either in general or else
regarding this specific issue.
Sixth, the heirs of the perpetrators extract a growing
percentage of the wealth of the heirs of the victims.
Seventh, the fraud must have a slogan, preferably very
short, easily memorized, universally accepted, and devoid
of content, just in case someone should try to sue the
perpetrator or his heirs for the commission of the crime.
Eighth, the heirs of the victims then consent to the plans of
the heirs of the perpetrators to extend the original fraud,
whether by additional fraud or else force, to new groups of
victims, who whose ancestors were not parties to the
original fraudulent transaction.
Ninth, the heirs of the original victims pay all of the costs of
this extension of the original fraud to a new generation of
victims.
Tenth, the new generation of victims is then persuaded to
bear a growing percentage of the costs of extending the
fraud to still more victims.
Eleventh, the bulk of the net return on the extension of the
fraud continues to flow to the heirs of the original
perpetrators.
Twelfth, the process must go on for more than a century;
two centuries are better.
There may be additional features of a successful fraud, but I
think the presence of this dozen constitutes a highly
successful fraud.
Can you think of a fraud in American history that has these
twelve, or even more? If so, you should draw up your case
in writing and submit it for consideration to this site's
editor, who loves a good fraud story better than silver. Tie
it to a conspiracy, and he loves it more than gold. Get the
government involved, and he cannot resist.
But you cannot match mine, for mine tops them all.
AND THE WINNER IS. . . .
James Madison and his unindicted co-conspirators.
First, the perpetrator who designs the fraud and then
executes it is subsequently hailed by the victims as a
hero, a genius, and indispensable to their own well-being.
Madison is universally heralded as the father of the
Constitution. This is an accurate assessment of his role.
From the Annapolis Convention of 1786, which called for
the Constitutional Convention of 1787, which (1) closed its
doors to the public and the press, (2) did not amend but
instead replaced the Articles, in specific violation of the
instructions officially given by several state legislatures to
their attendees; (3) unconstitutionally (Articles of
Confederation) ratified the illegal document in 178788,
Madison was there, running the show. Everyone knew it at
the time.
Second, the perpetrators must be bound by an oath of
non-disclosure, which all of them keep until they die, yet
which leaves no trail of paper for historians to discuss.
No member of the Convention ever revealed what went on
behind those closed doors. This included the opponents of
the Constitution. Luther Martin of Maryland, a signer of the
Declaration of Independence, opposed the Convention's
plan within days of his participation. He kept notes of the
debates, but his notes were not published until 1838, two
years after Madison's death the last member of the
Convention to die. Martin's notes were published along
with Robert Yates' notes, who also attended and opposed
what had been done there: Secret Proceedings and Debates
of the Constitutional Convention, 1787. Today, this book
is unread by most graduate students of the era, let alone by
the general public. I cannot find it on-line in text form just
offers to sell copies of the book. When a document of this
level of historical importance is not on-line for free, the
memory hole is still operating.
Madison turned over his notes to George Washington, who
took them back to Mt. Vernon. Madison knew that no one
would or could force Washington to surrender them. His
notes were not published until 1845.
What could have kept opponents like Yates and Martin from
publishing? One explanation is obvious, yet rarely
mentioned by historians: The members took a vow of
secrecy. That was an era in which oaths were taken
seriously.
Third, the nature of the fraud is well known by critics,
who tell their story in full public view at the time the
fraud is committed, but a majority of the victims reject
this story.
The anti-Federalists published numerous criticisms of the
secret Convention and the proposed Constitution. Yet in
every state ratifying convention, the Federalists won.
Madison was a consummate political organizer. More than
this: He is arguably the most organizationally successful
political theorist in man's recorded history. He even took
notes of the Convention and revised them just before he
died the very records that would shape what historians
would record. Solon and Lycurgus left no body of
theoretical works. Madison did. So, only Lenin comes close
to Madison in this regard. But the product of Lenin's
conspiratorial revolution only lasted for three-quarters of a
century.
Fourth, the critics' negative assessment is forgotten
over time, leaving the victims' heirs convinced that the
original fraud was a great idea and well worth
defending.
The first complete collection of the anti-Federalist papers
was edited by Herbert Storing and published in an
expensive collection aimed at university libraries by the
University of Chicago Press in 1981. You can find these
documents on the Web today, but in 1981, the Web did not
exist.
Typical of the attitude of twentieth-century historians is the
title of one of the most well-known articles in my graduate
school days of the 1960s, Cecelia Kenyon's "Men of Little
Faith: The Anti-Federalists on the Nature of Representative
Government" (1955). She was selected by the editors at
Bobbs-Merrill to edit the collection of Anti-Federalist
papers that grad students in my day read, or were supposed
to have read, before their Ph.D. exams in colonial American
history.
Fifth, anyone who discovers the true nature of the fraud
cannot gain a hearing because the heirs of the victims
dismiss him as a crackpot, either in general or else
regarding this specific issue.
I offer as evidence my book on the Constitution, Conspiracy
in Philadelphia (2004). I have posted it free on-line [1]. I
wrote the original as Part 3 of my 1989 book, Political
Polytheism. This may be the least popular book I ever
wrote, even among my targeted audience. I can recall one
dedicated lady, a stalwart in the independent Christian day
school movement, who told her son, "Why did he have to
write that?"
Sixth, the heirs of the perpetrators extract a growing
percentage of the wealth of the heirs of the victims.
Consider the United States government's budget, its annual
deficit, its on-budget debt, and its off-budget debt. If you do
not know where to begin, start here: M. W. Hodges'
Grandfather Economic Report [2].
Seventh, the fraud must have a slogan, preferably very
short, easily memorized, universally accepted, and
devoid of content, just in case someone should try to sue
the perpetrator or his heirs for the commission of the
crime.
"We the people." Want to try to match that one?
Eighth, the heirs of the victims then consent to the plans
of the heirs of the perpetrators to extend the original
fraud, whether by additional fraud or else force, to new
groups of victims, who whose ancestors were not parties
to the original fraudulent transaction.
I offer as evidence the Spanish American War, World War
I, World War II, Korea, Vietnam, Panama, Desert Storm,
Afghanistan, Iraq. Then there are these: foreign aid, the
State Department, and innumerable CIA coups.
Ninth, the heirs of the original victims pay all of the
costs of this extension of the original fraud to a new
generation of victims.
What are these costs? Read the collection of essays
compiled by John Denson, The Costs of War: America's
Pyrrhic Victories. If this is too much, then at least read
David Gordon's review [3].
Tenth, the new generation of victims is then persuaded
to bear a growing percentage of the costs of extending
the fraud to still more victims.
The acronym NATO comes to mind. More recently, the
Bush Administration assumed that Iraq's oil revenues would
pay for the reconstruction of the war-devastated country.
There were actually people who believed this. John Kerry's
entire campaign position on the Iraq War was grounded on
the assumption that the Administration should have sought
allies, who would then have shared the costs. Desert Storm
was his model. He promised that, if elected, he would line
up such cost-sharers.
Eleventh, the bulk of the net return on the extension of
the fraud continues to flow to the heirs of the original
perpetrators.
If you want to read one book on this well, three read
Philip Burch's three-volume work, Elites in American
History (1981). The complete set is out of print, and it was
published by an obscure publishing company. You probably
have never heard of it. I bought two sets, just in case.
With respect to the nature of the net return, consider the
crucial slogan of modern American politics. Although he
went to his grave denying that he ever said it [4], the
archetype of this policy prescription is still attributed
to Harry Hopkins, the senior advisor to Franklin D.
Roosevelt: "We will spend and spend, and tax and tax,
and elect and elect." The constituents of whichever political
party is incumbent still accept this.
Twelfth, the process must go on for more than a
century; two centuries are better.
This one has gone on since 1788.
CONCLUSION
The most accurate assessment of this incomparably
successful fraud was Patrick Henry's. When asked why he
did not attend the Constitutional Convention, he replied: "I
smelt a rat in Philadelphia."
[1] http://demischools.org/philadelphia.pdf
[2] http://mwhodges.home.att.net/
[3] http://www.mises.com/misesreview_detail.asp?control=15&sortorder=authorlast
[4] http://www.opinionjournal.com/columnists/rbartley/?id=110003714
http://www.lewrockwell.com/north/north445.html
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