• The Most Successful Fraud in American History

    Email Print
    Share

    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

    Email Print
    Share