Originally Posted by John Howard
Good find, John Howard (and a great post by Nationwide as well)!! The post you link to has a link to the Veazie Bank v. Fenno case in 1869. Richard Di Mare provides an interesting analysis of that case in his book Lawful Income Tax Avoidance. The law passed by Congress on July 13, 1866 laid an income tax upon "the amount of notes of any person, State bank, or State banking association, used for circulation and paid out by them..."
According to Di Mare: "The heavy federal tax levied on the issuance of its banknotes was simply because the Veazie Bank, like thousands of other state banks, was inordinately competing with federal currency-creation powers." [Emphasis added.]
More Di Mare commentary: "No new taxing power was needed to levy this indirect "death tax" on private banks and their notes."
From the Veazie case itself, some very interesting dicta from the Chief Justice:
"[United States notes], issued directly by the government for the disbursement of the war and other expenditures, could not, obviously, be a proper object of taxation."
[emphasis added]
"It can hardly be doubted that the object of this provision was to inform the proper authorities of the exact amount of paper money in circulation, with a view to its regulation by law."
"..in the case before us the object of the taxation is not the franchise of the bank, but property created, or contracts made and issued under the franchise, or power to issue bank bills."
[emphasis added]
"...the government is responsible for the redemption of both [referring to previously mentioned "United States notes and notes of the National banks"]"
"Having thus, in the exercise of constitutional powers, undertaken to provide a currency for the whole country, it cannot be questioned that Congress may, constitutionally, secure the benefit of it to the people by appropriate legislation...[t]o the same end, Congress may restrain, by suitable enactments, the circulation as money of any notes not issued under its own authority." [emphasis added]
In light of the last quote above, the income tax on currency not issued directly by the U.S. can be seen as a means for Congress to ensure that lawful public money issued directly by the U.S. remains available and competitive.
However, an inelastic currency over time becomes artificially undervalued and in practice gets driven out of use by an elastic currency, which iin time becomes overvalued. For example, I have a silver dollar coin from 1900 with a face value of $1. But I would be foolish to use it to buy a "dollar" worth of goods, because it is worth about 20 "dollars" in FRN's to a coin collector (mostly due to the silver content I am guessing). The FRN "dollar" is worth about 1.5 cents in cotton fiber paper. But because I can get a "dollar" worth of goods or services for it, I use the FRN instead of my silver dollar coin.
Btw, how does Federal Reserve get away with using the word "dollar" on its notes? I think that is proof on its face that you enter a contract and an agreed upon fiction of law by the use of an FRN, since the definition of a dollar in federal law remains a certain weight of gold.
Perhaps a better question is, how does the United States get away with using the word "dollar" on its notes, when they refuse to redeem their notes for the federally defined "dollar" weight in gold? I guess we are still technically in an emergency, since the President and Secretary of Treasury retain the power to declare a bank holiday any time.
The decision to simply stop circulating U.S. notes in 1971 was probably helpful in preventing this issue coming up very often.
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). We (elite) either had to downsize the coins (too obvious) or change their composition; and by far the most practical course of action was to change the composition (I mean c'mon, we can't let you have REAL MONEY alongside our debt-note money, did you even notice we removed the copper from your penny in 1981?). Nowadays, given the way that silver prices fluctuate (thanks to us rigging the COMEX & LBMA), it would be impossible to come up with a viable silver coinage (not really, America has billions of silver coins but we banksters run this country)-- and I'm not even going to get into the deflationary aspects of tying our monetary system to a precious metal (like paying less for goods is bad. Oh, what a masterwerk of disinfo!).
