The Most Successful Fraud in American History

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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 1787—88, 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. 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.

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.

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, 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.”

March
27, 2006

Gary
North [send him mail] is the
author of Mises
on Money
. Visit http://www.garynorth.com.
He is also the author of a free 17-volume series, An
Economic Commentary on the Bible
.

Gary
North Archives

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