Saturday, August 13, 2016

The 200th Anniversary of Crony Capitalism’s #3 Favorite Bait-and-Switch Operation

The Tea Party Economist reports:
We all know #1. A few know #2. But #3 gets less publicity. It is known mainly because of the man who killed it.

The favorite is the Federal Reserve System. No surprise here.

In second place is Alexander Hamilton’s First Bank of the United States, which set the precedent, 1791-1811.

You can guess #3: the Second Bank of the United States. It was created in 1816. Three years later, it produced the nation’s first economic depression.

It is best known for two things. First, the Supreme Court upheld its sovereignty in the famous case, McCulloch v. Maryland (1819). That case created tax immunity for the U.S. government. The states may not tax any agency of the federal government. Such tax immunity did not officially exist prior to 1819. Textbooks do not mention this judicial fact.

Second, in 1832, President Jackson vetoed a bill to extend the life of the Bank for an extra 15 years beyond the “sunset” date of 1836. For doing this, historians dismiss Jackson as an economic ignoramus. Not only was he not an economic ignoramus, he delivered the United States from the scourge of crony capitalism’s most important institution until 1914.

This week, I discovered something that I had never heard of in over 50 years of studying American history. There was a link between McCulloch v. Maryland and Jackson’s veto. This existence of this link was deliberately suppressed by Chief Justice John Marshall in 1819. Marshall was so successful in suppressing this information that no historian saw its connection to the veto. I spotted it only because of my course in American history for the Ron Paul Curriculum. I have a Ph.D. in history. One of my fields was 19th-century American history. Yet I was not told of this connection. The historical guild has not talked about it. I think this is because no one has looked at the relevant documents and then put two and two together. I put the pieces together here.

You'll want to read the entire article.