Who Are The Freemen?

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This
article was written in the Spring of 1996, and appeared in Chronicles
(July 1996). Though forgotten today, the Montana Freemen were targeted
and arrested by the federal government for issuing their own currency.
The secret history is that they were heralded by the media only
a few years earlier as victims of industrial capitalism.

Trapped in their Montana farm, trying to fend off the feds, the
worst crime the "Freemen" are accused of is attempting
"to compete with the Federal Reserve," according to the
New York Times. Imagine. These people thought that private
parties could, on their own initiative, issue checks, print notes,
and extend credit without monetary backing. They should have known
that only a government-backed banking cartel can do that.

If
this type of privatization continues unabated, street gangs will
attempt to impersonate tax authorities by stealing property, looting
families, and driving people to financial ruin. We can’t have that.
A government of this size and fragility must retain the exclusive
right to engage in such actions as check kiting, counterfeiting,
and large-scale theft. But I wonder why street gangs don’t get similar
treatment?

It
is clear why Ralph Clark, the leader of the Freemen, had the notion
that he could run a monetary system better than the government has.
Mr. Clark is himself a victim of a federal money machine and the
business cycle it generated some 15 years ago. It bankrupted him,
and set in motion the surreal and tragic events that led to his
present fame. He probably assumed his private financial system,
however shaky, would work better than the one that has wrecked him.

This
is Mr. Clark’s second go-around with the media. In the early 1980′s,
before he was demonized as a thieving, right-wing wacko on the government’s
dole, he was trumpeted as a prime example of the beleaguered family
farmer whom the government needs to immediately save. He was the
subject of numerous moving profiles, including one in Life magazine
and another by Geraldo on ABC’s 20/20. It was Mr. Clark’s sad story
that inspired the ‘Farm Aid" concerts starring Willie Nelson
and John Cougar Mellencamp. Nobody cared what his theology was back
then.

In fact, neither portrayal gets it right. Better to think of him
as a high-profile victim of the business cycle. During the fed-driven
credit boom in the mid-1970′s, when inflation was picking up speed
but interest rates seemed under control, banks encouraged farmers
and ranchers to expand their holdings using government-backed loans.
In that inflationary atmosphere, debtors appeared to win out over
savers. Racking up debt appeared to be a way to profit from monetary
debauchery. The central bank was controlling the market signals,
and the signal said borrow to the hilt.

In
the first phase of such a fed-driven economic boom, an economy can
make impressive gains in growth while interest rates and even price
increases remain under control. When inflation does pick up, debtors
do indeed do well, paying off their debts in cheaper dollars. But
since the boom is artificial, and destined to turn into bust, it
is important to get the timing right if you are going to play this
game. At some point, interest rates will begin to incorporate an
inflation premium, and then you are sunk.

So
it was with Mr. Clark. In 1978, he borrowed heavily to add 7,000
acres to his land, and about one year later interest rates spiked
up to 21 percent. With a normal profit, he might have gotten by,
but in 1980 and 1981 be experienced a serious drought and then a
hailstorm that destroyed what remained of his crops. A year later,
the Farmers Home Administration called in his entire loan of $825,000.
Land that had been in his family since 1913 was on the verge of
being taken away by his supposed benefactors, the federal government
and its connected financial interests.

Mr.
Clark thus became a national symbol of the declining fortunes of
family farms. In reality, he was a living example of why you should
not trust the federal government’s banking methods. The Reagan administration,
under pressure from the media campaign and busy making political
tradeoffs to support a military-driven Keynesian economic boom,
vastly expanded agricultural subsidies and imposed a moratorium
on farm foreclosures. The relief and the cash came just in time
for Mr. Clark and his family. He signed a ten-year contract in 1984
for the government to pay him $48, 000 per year to suspend production
on steep slopes and eroding land.

With
extra time on his hands, Mr. Clark began to read into what makes
the government’s monetary system tick, and became self-educated
on all sorts of matters, from taxes to contract law, and tapped
into the "patriot" movement of government skeptics and
dissidents. When the subsidies stopped, Mr. Clark found himself
still buried in debt and in more trouble than ever. That’s when
he resorted to privatizing some of the fancy financial schemes he
learned from federal policy. This involved issuing "perfected
liens" on assets of federal agents or agencies charged with
breaking contracts, which are then converted into ‘Certified Bank
Drafts" and spent or held.

I
do not understand this device any better than I understand the fed’s
own Mexican bailout or Robert Rubin’s financial shell game that
kept the government running after Congress cut off its money. If
these actions are legal, I do not know why Mr. Clark’s should not
be. In fact, Media Bypass magazine says that the Treasury Department
has accepted checks written on liens over the years, and has even
issued refunds for overpayment. When you are $5 trillion in debt,
I suppose, you take what you can get.

If the Freemen are crazy, the people who run the government and
its financial system are crazier still. The government began issuing
paper money on top of liens and issuing endless checks as early
as the New Deal, or possibly earlier. Lincoln financed his war against
the South with the same technique. So have most governments in world
history, but less with respectable cover than the Federal Reserve
offers the United States government. The error the Freemen made
was not to understand that Leviathan, especially when it is at war
or deeply in debt, claims certain privileges.

As
the government cracked down on this privatized Federal Reserve system,
and surrounded his farm with federal agents, Mr. Clark hung a sign
outside his house: ‘Freemen are NOT a part [ofl the de facto corporate
prostitute a/k/a the United States." But if hanging a sign
is all it takes to be independent, those words would be on everyone’s
front door. The key to government – which is why people find it
so objectionable when it becomes too big – is that it is above
the law it enforces against everyone else. That’s why it can claim
that the "township" of Justus where Mr. Clark lives does
not even exist, that his wheat farm has already been repossessed
and sold at an auction, and that his paper money notes are fraudulent
but that T-bills and the new $100 note are not.

Mr.
Clark’s is a tragic story. This family was tricked by the fed’s
manipulation of interest rates (which was heralded in a liberal
media campaign), sucked into the farm welfare racket, and then had
its farm confiscated by the very people who claimed to be helping
it all along. We’re supposed to be surprised that some people will
buy into a cranky monetary theory and adopt exotic political ideologies
to keep the FBI and other federal agencies from destroying their
lives?

What
is puzzling about this case – and puzzling too about the mounting
cases of other groups targeted by the FBI – is why the federal
government should be involved at all. We’re talking about, at worst,
$2 million of funny money, which the Freemen never tried to pawn
off as government-approved paper currency or checks. Most of the
people who got it didn’t accept it; those who did knew what they
were doing, and were often associated with local and state tax offices
and other agencies.

If
media reports are correct, the Freemen are hardly the only ones
engaged in issuing these "liens" against agencies and
their employees. Besides, credit card fraud alone runs into tens
of billions per year, yet the feds are not involved in every case.
There are several crackhouses in a neighboring town, often swarming
with visitors, that are not surrounded by FBI officials. The Crips
and the Bloods, who kill and maim people, are not broken up as conspiracies
against the public. For that matter, the Fed, Congress, and the
White House can dump $40 billion on a bankrupt foreign government,
and you are called a nutcase for even looking into it.

No, we all know that the FBI’s actions in this case, and in many
others, are designed to make the point that radical political dissent
will not be tolerated. It’s roughly the same point the government
tried to make, much more violently, at Waco and Ruby Ridge. Today,
we are supposed to celebrate the government for having the "patience"
not to have stormed the farm and killed people, since the regs no
longer allow agencies to issue shoot-on-sight orders. How sanguine
we’ve all become to unconstitutional violations of liberty and rights.

In
his state of the union address, Clinton explained that we should
"never – ever – shut the federal government down
again." If we did not have a government, he went on, Americans
would be "left to fend for themselves," precisely what
more and more people are pleading for the opportunity to do. Ever
more government resources are devoted to making sure they cannot.
We might say that the purpose of the present regime is to prevent
any group from claiming to be freemen, ever again.

Jeffrey Tucker is editor of The
Free Market
.

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