How did the United States change from the republic envisioned by the framers into a monarchy with its royal court that it has become today? I started thinking about this when I was analyzing the State of the Union speech given by President Barack Obama recently and I decided to go back and look at State of the Union speeches given in the past. What I found was that Thomas Jefferson, when he became President, decided not to give a State of the Union speech at all because he thought that walking out in front of a joint session of Congress reminded him of the British monarchy that the country had gone through a war to be rid of. Instead of a speech, he wrote a letter to Congress, intentionally vague, so that it wouldn’t seem like a royal decree and then he had a clerk read it out loud to the Congressmen and Senators.
The Constitution doesn’t require a speech. Article II, Section 3, says only that from time to time the President is required to give Congress information of the State of the Union and to recommend things for their consideration. That’s all that it requires. Jefferson’s example became a tradition that was carried on until it was broken by Woodrow Wilson in 1913. The 20th century, in many ways, became Wilson’s century as he brought into existence much of what we see today. In the very least he laid the groundwork of what we have become today.
Woodrow Wilson was the son of a preacher, but pursued a career as an academic. He taught at several colleges along the way before eventually taking a position at Princeton. He served as President of Princeton from 1902 to 1910. He served briefly as governor of New Jersey, 1911 into 1912, then he gained the Presidency in 1912. There was acrimony and division in the Republican Party that split the ranks and Wilson won with only 43% of the vote.
From the statement of his friends and various writings, he believed that he was ordained by God to hold the position of President – perhaps the early formation of a divine right philosophy. According to his biographer, this gave him an arrogance and a smugness which masqueraded as righteousness.
THE INCOME TAX, THE FEDERAL RESERVE, AND THE 17th AMENDMENT
Wilson was a believer in the power of the state and he led the nation into centralization and bureaucracy. In 1913, when he took office, Congress, along with the Europeans, began handing to him the tools to attain the goals that he had for the nation. To accomplish what he wanted there had to be key changes in the power system as defined by the Constitution. The 16th Amendment giving Congress the power to tax incomes was passed in 1909, but after years of fighting was finally ratified in February 1913, just in time for Mr. Wilson’s use. The 17th Amendment calling for the direct election of US Senators was passed in 1912, but not ratified until April 1913, once again, just in time for Mr. Wilson.
These two amendments changed the power structure of the nation and altered the relationship between citizens and the federal government. Occurring so closely together, along with other things that happened a few months later, it was the equivalent of a second American revolution. The direct election of Senators greatly diminished the republican form of government envisioned by the founders in which the states had influence and even control of half of the legislative branch. Senators had previously been beholden to the state legislatures and this insulated them from day to day popular opinion. There was no need for the multi-million dollar election campaigns that we see today. This also focused the Senate on the interests of the states rather than being just another popular assembly. Direct election of Senators made them just another group of populist politicians.
The 16th and 17th Amendments contributed a great deal to the fundamental changes to the constitutional system that were necessary in order for President Wilson to complete his agenda for America. It seems that every President has his agenda and he has no shortage of people who want to help him accomplish it.
The 16th Amendment brought about the enactment of a national income tax during Mr. Wilson’s first year in office, but it was only on the “rich.” At that time, rich people were defined as those earning over $4,000 per year. In today’s terms, thanks to the Federal Reserve, that would be about $80,000 per year – not rich then and not rich now.
The important thing was that the dam was breached, the Rubicon crossed, or however you want to say it. The power to tax income was the thing holding back the march of federal power and purchased influence based on spending by the federal government. It was a short jump from that to the federal government’s being able to buy anything and anyone. Before Woodrow Wilson was President, federal government spending never exceeded 3% of gross domestic product except during the war of 1812 and the Civil War.
At that time, revenue was still derived constitutionally, that is, from customs, levies, import duties and other excises and tariffs. During Mr. Wilson’s two terms in office, spending rose to more than 20% of GDP. So Woodrow Wilson had broken the interest of the several states with the 17th Amendment and their influence was on the decline; he also had broken the dam holding back federal spending with the power to tax income.
He still had another river to cross however before his destruction of Constitutional government was complete and that was accomplished with his support of the Federal Reserve Act passed December 23, 1913, in the wee hours of the morning with Washington all but deserted for the Christmas holidays. You get a good look at the Federal Reserve and how it works from G. Edward Griffin’s book, The Creature From Jekyll Island and Eustace Mullins book, Secrets of the Federal Reserve. The name Jekyll Island comes from Jekyll Island, Georgia, where all the bankers went in secret to rewrite and take control of the United States financial system.
The Federal Reserve Act stated that its purposes were:
- To provide for the establishment of Federal Reserve banks;
- To furnish an “elastic currency” (they’ve certainly done that haven’t they?);
- To afford means of re-discounting commercial paper;
- To establish a more effective supervision of banking in the United States and,
- For “other purposes.”
The Fed was composed of a board of governors in Washington DC and 12 regional Federal Reserve banks. By statute, the responsibilities of these banks are to:
- Conduct the nation’s monetary policy by influencing the money and credit conditions in the economy;
- Supervise and regulate banking institutions to ensure safety and soundness of the nation ‘s banking and financial system;
- Maintain the stability of the financial system;
- Provide certain financial services to the U.S. government financial institutions and to public and foreign official institutions including a major role in operating the nation’s payment system.
The Federal Reserve was created as, and has followed hard to remain, “an independent central bank.” This is a totally European concept reflecting the need to provide banking services to the sovereigns – so “welcome to America Mr. Monarch.” The Fed is independently run within the government and its decisions do not have to be ratified by Congress, the President or anyone.
It is still, however, a creature of government and the creature is not greater than its creator. The Constitution gives to Congress the power to coin money and to set its value and therefore Congress maintains oversight over it. Thanks to Mr. Wilson’s assistance in 1913, Congress delegated, or assigned, its power to coin money and regulate its value to the Federal Reserve. It could take it back however, any time. Congress could simply repeal the Federal Reserve Act of 1913 and it would be back in control of the nation’s monetary system.
In simple terms, folks, the Federal Reserve is a European style central bank that can create on its own authority and subject only to very weak indirect oversight by Congress, credit denominated in U.S. dollars. It is now a credit based economy – that’s the way it’s run.
The 16th Amendment, which gave the President power to tax income, broke the dam holding back federal spending. The 17th Amendment broke the Congress’s connection to the states. The Federal Reserve gave control of the U.S. monetary system to the banks, thus President Wilson was handed in his first year in office, a credit backed elastic fiat currency. These were the beginnings of the enlargement of federal government power based on spending financed by taxes, borrowing and its resultant national debt.
OBAMA AND WILSON: TRANSFORMING AMERICA
Like President Obama now, Wilson meant to transform America, and like Obama, Congress gave him the tools to do it. As Wilson put it, he wanted to “put government at the service of humanity.” But as Thomas Jefferson put it in the Declaration of Independence, the purpose of government is to secure our God given rights, not to serve humanity.
Mr. Wilson, again like Mr. Obama, was an activist in pushing government expansion and in getting government-expanding legislation through Congress. Such legislation as the Federal Trade Commission in 1914 and the Federal Farm Loan Act in 1916, brought the federal government into the daily lives and the living rooms of Americans everywhere. You may recall that Congress recently passed a $1 trillion farm bill now some 98 years after this organization was formed.
Mr. Wilson, like Mr. Obama, embroiled the United States in foreign wars including bringing the U.S. into the Mexican civil war and even invading Mexico and sending U.S. troops into Russia to oppose the Bolshevik Revolution. This is the 100th anniversary of World War I which began in Europe in 1914. The U.S. would not officially enter that war until three years later however.
Mr. Wilson was very lopsided in monitoring policy against neutral and not at war countries in World War I. He did not seek a balanced neutrality in the early years of the war. Once it started, he forbade U.S. banks from making loans to the warring powers yet permitted the banks to extend large “credits” to the French and British. In effect, the U.S. was bankrolling the war just as we do yet today in wars across the Middle East. Possibly, without the United States’ elastic currency, the countries would have run out of cash and that very unnecessary war would have ended much earlier.
Many countries were sucked into the war as it went on and on and on, ruining many lives across Europe. Much as today, U.S. credit policies perpetuated war, thus allowing it to get worse and worse, leading directly to German submarine warfare against the supply convoys.
The U.S. population was strongly against U.S. troops being involved in this European war, much as they are today. The production of war materials however led to economic boom times in the U.S., all funded by credit much as it is funded today.
In 1916 Wilson ran for his second term on the slogan, “he kept us out of war”, just as President Obama ran on ending the war in Iraq which is now worse than ever. Less than 90 days after his inauguration for a second term, Woodrow Wilson asked Congress for a declaration of war against Germany. Wilson sought to control opposition to his war policies with laws designed to limit free speech and political dissent. The elastic currency of the Federal Reserve funded the war as Wilson continued his domestic agenda at home, much as we do today. Under Woodrow Wilson, America got its first introduction to the warfare state.
THE WILSONIAN WARFARE STATE
Wilson’s impact on America is hard to over estimate. He dominated the 20th century to the extent that no one alive today has ever experienced anything but a Wilsonian world. No one alive today can remember a time when the world at large worked any other way than the Wilsonian way.
His effort to make the peace in his image has involved America in internationalist, globalist government that still exists 100 years later. It required certain assumptions about America and about the world. Certain things about America had to change. He had the power to tax income and he had the Federal Reserve and its elastic currency with which to carry out his plans. Most nations were not so fortunate. One thing is clear though, looking back from 100 years of history, if Woodrow Wilson had not become President, the United States would have had a far different 20th century.
In one sense, Wilson simply copied, or carried forward, the centralized debt-financed government model created by Otto von Bismarck in Germany 40 years earlier. So we ask ourselves then, was he an innovator? Did he invent this welfare-warfare state or simply copy the diagrams created by others?
Could then the U.S central bank, the Federal Reserve, have come into existence without Wilson? There is little room for doubt that the bankers needed their man in the White House in order to bring their plan into existence and push their legislation through Congress. Without the Federal Reserve, how would the world economy that has evolved have been financed? Without Wilson’s influence, would the income tax and credit based economy have existed in time to feed the engines of World War I.
Without Wilson, would the war to make the world safe for democracy have lasted so long, torn apart European civilization and destroyed a whole generation of young men? Would a corporal in the German army in 1918 named Adolf Hitler have risen in only 14 years to become chancellor of Germany?
Absent World War I, would an obscure lawyer named Franklin Roosevelt have become Secretary of the Navy and then elevated himself into the Presidency of the United States? How would soldiers such as Douglas MacArthur, Harry Truman, George Patton and most of the leaders of the 20th Century world have been trained and formed?
Would the war have lasted so long and been so expensive that Russia descended into revolution and chaos leading to Lenin, Stalin and the deaths of 70 to 100 million people? Would the Ottoman Empire have collapsed and dissolved spawning the modern Middle East and allowing Great Britain to draw the lines of nations on invisible maps – paper-forming countries that are even today at war and threatening to break apart?
Would the concept of world government a la the League of Nations, leading later to the United Nations, have formed in the minds of men? Would the rise of Hitler and Mussolini from the ashes of Europe have occurred? Would the Holocaust have occurred – the slaughter of World War II after the draconian peace terms forced on Germany by Wilson and the allied powers? Would the development of nuclear weapons and their use have occurred?
Would the Bretton Woods Agreement, giving the U.S. reserve currency status, have occurred? Would the United States have embarked on a 60 year pattern of no-win wars against unknown enemies such as communism and terror? Would we have arrived in 2014 with $17.5 trillion of debt and the Federal Reserve now printing $65 billion a month?
Who knows the answers to all these questions, folks? But they are worth contemplating as we observe the path of America’s descent from Constitutional Republic into the monarchy we have become.
Darrell Castle is the creator and voice of The Castle Report, a tri-weekly podcast examining the issues affecting Americans from a constitutional and historical perspective. He is a former USMC combat officer in Vietnam, a private practice attorney, member of the Executive Committee of the Constitution Party, and served as the 2008 Vice-presidential candidate for the Constitution Party. Listen to more podcasts at: www.castlereport.us.