How Did It Happen?

Does anyone ever wonder how we got the income tax?  This tax has become so universal, on international, federal, state and even local levels, that it is taken for granted, but few people seem to question its legitimacy, history, or even its purpose.

An internet search suggests a form of “wealth tax” or income tax existed in the Roman Republic, ancient Egypt, and China, but the form we know, usually imposed to finance wars, began in England in 1188, by Henry II, for the “Saladin tithe” to fund the Third Crusade.

In his landmark book, Wealth of Nations, in 1776, Adam Smith, a Scott, suggested even the King of Britain could not get away with an income tax.  Tax on interest or money is difficult to calculate without extraordinary “inquisition” into every man’s private circumstances and “would be a source of such continual and endless vexation as no people could support.”  However, a mere nine years after Smith died in 1790, British Prime Minister William Pitt the Younger formally implemented the income tax, designed to pay for the French Revolutionary War, to purchase weapons and equipment.  It was a progressive income tax and in place between 1799 and 1816, but for a short reprieve following the Peace of Amiens in 1803.  It was reintroduced in Great Britain in 1842 by Prime Minister Sir Robert Peel, who was seeking revenues for the government’s increasing budget deficits.

“A heavy progressive or graduated income tax” is the second major tenet of the The Communist Manifesto, as delineated by Karl Marx and Friedrich Engels in 1848.  The fifth tenet advocates “Centralization of credit in the hands of the State by means of a national bank with State capital and an exclusive monopoly.”

In the United States, President Abraham Lincoln instituted the first US income tax in 1861 to pay debts from his war.  It was repealed by Congress in 1872.

The Socialist Labor Party pushed for an income tax in 1887.  The Populist Party demanded it in its 1892 platform, and the Democrats, led by William Jennings Bryan, advocated for the progressive income tax law passed in 1894.   Called the William-Gorman Tariff Act (Revenue Act), it reduced tariffs and imposed a two percent income tax but only on the top ten percent of earners.  In 1895, in Pollock v. Farmers Loan and Trust Co., the Supreme Court declared the tax unconstitutional, based on the constitutional requirements that taxation be apportioned by a state’s population.

Republican Rhode Island Senator Nelson W. Aldrich, who served between 1881 and 1911, was probably the single most influential individual in creating the financial structure we know today.  As chairman of the Senate Finance Committee–which oversaw bank regulation and monetary policy–he was possibly the most powerful man in the nation from 1898 to 1911. The financial Panic of 1907, (which some believe was engineered by banker and Aldrich friend/business associate, J. Pierpont Morgan) led to the Aldrich-Vreeland Act in 1908, which was designed to make the monetary supply more elastic.  It also established the National Monetary Commission with Aldrich becoming chairman.  As chairman, he led a team of “experts” to European capitals to study their banking practices, and returned as a proponent of a national banking system.  He worked in secret with powerful bankers to develop the “Aldrich Plan,” which eventually formed the basis of the Federal Reserve Act of 1913.  The secret dealings that began in 1910 and led to the creation of the Federal Reserve system is well documented in The Creature from Jekyll Island:  A Second Look at the Federal Reserve, by G. Edward Griffin.

Aldrich, who apparently had a habit of publicly opposing things he wanted, then voted in Congress for the corporate income tax in 1909, claiming this was to insure the personal income tax would not be passed.  Ten years before, he had called the income tax “communistic.”  However, later he and President William J. Taft then agreed that a constitutional amendment would be more effective in overriding the Supreme Court’s objections the 1894 law.  Aldrich claimed he believed the 16th amendment would never be approved.

The relationship between the Federal Reserve System and the new income stream generated by the income tax is not well documented, but it resembles that of the Whiskey Tax and the nation’s first central bank in 1791.  At that time, Treasury Secretary Alexander Hamilton introduced legislation for the whiskey tax on December 13, 1790 and for the central bank the next day, on December 14, 1790.

A common thread in the two bank/taxing schemes was that they gave the federal government the authority, if not the right, to investigate every taxpayer’s personal property and bank accounts searching for infractions, and to seize property it decides has been obtained illegally.  This has set the precedent for the federal invasion into private lives that has become so prevalent today.

In the “Gilded Age,” Nelson Aldrich was well known for his close and unsavory ties to business, by which he had become personally wealthy.  He believed his power base would successfully defeat the income tax amendment.  Indeed, while they were opposed, their solidarity had broken down, so individuals like Andrew Carnegie and John D. Rockefeller (whose son John Jr., married Aldrich’s daughter Abby) formed tax-exempt foundations to shelter their wealth before the tax went into effect.

At that time the income tax was promoted as a “class tax,” with only the upper income earners affected, so the idea of wealth re-distribution appealed to lower income earners.  Only later did President Franklin D. Roosevelt expand the “class tax” to a “mass tax,” according to former IRS historian Shelley L. Davis in her book, Unbridled Power: Inside the Secret Culture of the IRS.

Proponents of the income tax used other arguments, too.  It was proposed as a more reliable method than tariffs for raising federal revenues, and gave President Woodrow Wilson justification for reducing tariffs.  Also at that time the idea of Prohibition was in the air, and advocates of Prohibition recognized the government would lose income from excise taxes on alcohol.

The 16th Amendment reads, “The Congress shall have the power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”  It was passed by Congress on July 2, 1909 and sent to the states for ratification.

It was supposedly ratified by the requisite number of states by February 13, 1913.  However, there is some question about whether it was ever properly ratified.  In 1985, William J. Benson published The Law that Never Was about the income tax.  Here, Benson claimed that in 1984 he had visited national archives and all 48 state capitals looking for records of ratification.  Not only had he found variations in wording and punctuation from the congressionally approved amendment, but he claimed some states which were certified as ratifying never did or voted against the amendment.  He said only two to four states had ratified as written.

Constitutional amendments require ratification by three-fourths of states.  In 1913, there were 48 states, so 36 would have had to ratify.  Benson found that seven states had not ratified at all.  1913 Secretary of State Philander Knox had claimed Kentucky and Tennessee ratified, but Benson said they did not.  Eight states were reported as having ratified, but Benson found no evidence of it.  Six more states did approve, but the governors or other officials required to sign did not sign.  Twenty-five states violated provisions of their own constitutions in ratification, and 29 violated state procedures.  Twenty-two states changed the wording to ratify, one state changed spelling, and 26 states changed punctuation.   Oklahoma changed the wording to say the opposite of what the amendment said.  Tennessee law required a delay until the next session but ignored it.

The American Law Division of Congress’ Congressional Research Service responded in May, 1985 to Benson’s claims.  “While it didn’t rebut Benson’s factual claims,” it said the amendment had been ratified “because Knox said it had been ratified,” says one internet source.

In 1990 Benson went to prison for tax evasion.  He served 15 months before a federal appeals panel overturned the conviction, saying a government witness had given improper testimony in the 1987 trial.  This occurred less than one month before Benson was scheduled for parole.

Benson’s book caused quite a stir, and he was selling packages based on his book to help individuals fight the Internal Revenue Service.  However, those who have used his arguments have not fared well in court.  Also, Benson himself was the loser in court rulings in 2007 and 2009 that determined his “Reliance Defense Package,” which he sold for $3500 to tax protesters, was fraudulent.

Courts have denied requests for evidentiary hearings and have refused to hear the arguments against the 16th amendment itself, claiming “Secretary Knox’ decision is now beyond review.”

In an interview in 2013, Benson remained an income-tax evader and bragged he has never gone back to prison, despite his continued outspoken crusade against the 16th amendment.

 

 

 

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Wealth of Nations Synopsis

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Adam Smith’s landmark book, Wealth of Nations, published in 1776, is a 500-plus page treatise on economics, oft cited bur rarely read, except by economists and masochists like me.  If you can overlook Smith’s sing-song style, his tediousness, repetition, generalizations, vague and archaic terminology, and inconsistent reasoning, the book is worth reading, especially as a social history.  It is important to recognize that Smith writes as a spokesman for the monarchy and the wealthy stock holders, landowners, and mercantilists who made the book an immediate hit and won him a position as Commissioner of Customs in Edinburgh, Scotland.  His “commercial society” has enshrined him as the “first modern economist,” or “father of modern capitalism.”

A confluence of factors contributed to the conditions of Smith’s time.  The “industrial revolution” began in Britain with the invention of the steam engine in 1712, first used for pumping water out of coal mines.  Other inventions quickly followed, eventually leading to the growth and dominance of the British Empire, through manufacture, trade, and colonization. Another feature of 1700’s Britain involved war and military conquest.  As an island nation, with England, Scotland, and Wales united as the United Kingdom, or “Great Britain,” in 1707, it developed its sea power and had established dominance in the seas and in trading routes by the time Smith wrote Wealth of Nations.  Competition with other powers brought war and its heavy costs.

Wealth of Nations refers repeatedly to the “late war,” which presumably was the Seven Years’ War, fought between 1756 and 1763.  One of the book’s primary aims appears to be exploring the various modes of taxation the king could use to pay debts from that war.

Meanwhile, the industrial revolution was bringing a rapid shift in social and cultural dynamics, as Great Britain went from predominantly agrarian, rural society to one of urban and industrial predominance.  The textile industry was probably the first to be affected in a major way, with the invention of the spinning jenny–“jenny” is a nickname for “engine”–by Englishman James Hargreaves in 1764.

The iron industry also underwent fast transformation, and with it, the transportation industry.  Communication and banking adapted accordingly.

Because industrialization necessitated large capital investments, business ownership shifted from individuals to groups, including partnerships and corporations.  The banking industry grew by leaps and bounds after the Bank of England was first chartered in 1694.  The London Stock Exchange boomed after the Seven Years’ War.  The government became increasingly dependent on it to finance wars.

Like many of his contemporaries, including Benjamin Franklin, Thomas Jefferson, Alexander Hamilton, and George Washington, he was fascinated by machinery and its commercial potential.

In the first pages of Wealth, Smith presents the plan for the book, summarizing that the real wealth of a nation comes down to the “annual produce of the land and labor of the society.”

He then distinguishes between towns and agriculture and glorifies machines for facilitating division of labor, thus efficiency and productivity.  He uses pin-making as an example, with speed of production due to division of labor the only criterion.

Smith claims farmers are lazy, because as one-man operations, they waste time changing tasks, whereas a group of men in a “workhouse,” each doing one small task repeatedly, are able to produce much more in the same time period.

He says “Cochin-china” is one of several Asian countries that have sea access as well as extensive canals inland, but most of their trade is internal.  He wonders why they have not sought to trade outside their own countries.

Wealth emphasizes the enduring value of labor, despite the fluctuations in metal money.  The discovery of gold and silver in the Americas caused a glut in Europe that reduced the value to a third of what it was before.  A man can only do so much labor, but that labor holds its value through all the ups and downs of markets.

Wealth gives a multiplicity of examples of how labor costs rise and fall in relation to cities versus rural, or demand—such as North America, where labor was in great demand and food relatively inexpensive—and how much a laborer must be paid to sustain himself and children to replace him.  Since 50% of children die before reaching adulthood, says Smith, we need to calculate the cost of feeding four children in every family.  Smith acknowledges that all the laws favor the employers, should the laborers strike for higher wages.

While he presses the point that nothing happens without labor, Smith is happy to squeeze the laborer into a bare subsistence wage, better to keep him working hard to make ends meet.

He cites numerous examples of relationships between labor and stocks. New land, like the colonies, attracted lots of stock capital because it was cheap, full of natural resources, and soil was rich.

Early on “corporations” restricted competition, with the king’s (or queen’s) support.  Smith says 5th of Elizabeth formalized the “Statute of Apprenticeship” that restricted practice of craft or trade to those who had apprenticed seven years.  Church wardens, mandated by the king to provide for the poor in their parishes, did everything possible to keep the poor from moving in.

Corn was the major food crop in Europe.  Smith says tobacco grows well enough in parts of Europe, but it is illegal because it’s too hard to tax individual farmers, so tobacco is imported from (primarily) Virginia and Maryland, warehoused, and resold at profit.  Sugar is in great demand, and is very expensive, imported from Caribbean colonies.  In “Cochin-china” sugar is no more expensive than ordinary food crops and is cultivated alongside them and apparently not exported much.

Labor and landlords benefit from policies that also serve the public.  Stockholders, however, are loud, moneyed, and invested in reducing competition, so they generally work against the public good.

Smith explains how money is not the same as circulating capital.  It is the “wheel” of the economic engine but has no intrinsic value.  A coin is not used up when it is exchanged for goods or services, so the same coin, each time it changes hands, buys its face value for the purchaser, who gets his coin’s “worth” in product.

He also writes about the banks, primarily of Scotland, that used paper money promissory notes in excess of gold deposits for lending.  80% paper to 20% backup.  Merchants could also get lines of credit, so were encouraged to accept that bank’s paper in trade, to promote it to friends and associates, and to spend it.  However, paper was no good in foreign countries, so gold was exported to import foreign products.

“No equal capital puts into motion a greater quantity of productive labor than that of the farmer,” says Smith.  Also, farms stay put, like retail shops, and can’t be outsourced.

He discusses how the American trade is financed by merchants in Great Britain.  He uses the example of hogsheads of tobacco from Virginia and Maryland as commodity money that is bought in excess by England and resold in other places.

But the “great commerce of every civilized society” is between country and town.  In fact, the home trade, by far the most important, was considered subsidiary to foreign trade, based on Man’s book, England’s Treasure in Foreign Trade.  Smith says the mercantile system works in many ways against the enrichment of the country.  It selectively encourages exportation and discourages importation.

He says it is a mistake to politically favor exports over imports.  Restraints on imports consist of high duties and absolute prohibitions.  Exports were encouraged by “drawbacks” (tax relief), “bounties (subsidies), advantageous treaties, and the establishment of colonies.  Smith is down on bounties.  He specifically mentions corn, because it, to him, is the commodity by which the price of everything else is measured.

He claims restraints on importation and prohibitions may be good for the home manufacturers but not for the population or the economy as a whole.  The famous “invisible hand” comes up on page 300, in which Smith mentions the folly of “statesmen” who try to control private enterprise.  He says the market will determine what is needed without government help.

Merchants and manufacturers derive the most benefit from monopolies, says he, whereas farmers and populace derive little and undoubtedly lose by them.  Corn merchants benefit more from subsidies than corn farmers.

The notion of “balance of trade” is “absurd,” and he enumerates reasons.  Smith also states that it is silly for nations to try to improve their wealth at the expense of other nations.  This leads to hostilities rather than friendly exchanges.

Smith asserts again that all wealth comes from the land, with farmers the most productive workers and everyone else subsidiary.  Those who bring raw materials to more useable form, like wool manufacturers, do not add as much value as the farmer does by cultivating the land.

Smith cites the duties of the sovereign.  He claims the sovereign does not have the duty or right to regulate commerce.  At the same time, he says the king’s first duty is to protect the country from other governments.

He makes the case for a standing army and says this is the only way the sovereign can maintain peace and order.  Now “civilized” societies can conquer “barbarous” societies, which don’t have the advantage of gun power.  He believes, therefore, that gun power equals civilization.

Smith mentions highways, bridges, navigable canals, coinage, and the post office as public institutions that facilitate commerce.  Post offices everywhere, he says, are valuable revenue sources for the government, with steady and immediate cash flow and low maintenance costs.

Obviously, a glaring inconsistency in Smith’s premise is between his views on free trade and his belief in the importance of a standing army.  Here we have our pseudo proponent of free trade justifying forts and garrisons in foreign countries to protect merchants’ stores.  Where these countries do not allow forts, it has been necessary to send ambassadors.  Smith believes most ambassadorships were created to protect trade.

He goes into “regulated companies,” which are open to anyone with the money, willing to submit to the rules, and trading his own stock at his own risk.  These are opposed to “joint stock” companies, which sound like publically traded companies today.  Pooled resources and pooled profits.  He says only four types of joint stock companies seem valid.  He cites:  1. The banking industry; 2. Fire and sea-risk insurance companies; 3. Canal or navigable channel companies; and 4. Those bringing water by pipe or otherwise to a great city.  He notes the Bank of England doesn’t have exclusive privilege, except that no other bank in England can employ more than six people, and the Bank of England lends to the sovereign.

The last hundred pages of the book are devoted to taxes and other potential sources of revenue for the commonwealth or sovereign.

He floats the concept of a central bank, calling it a “public bank to support public credit, and upon particular emergencies to advance to government the whole produce of a tax, to the amount, perhaps, of several millions, a year or two before it comes in.”

Smith asserts the king should be wealthier than anyone, with grand style and pomp to support his “dignity.”

He distinguishes between direct and indirect taxes, saying the former, as on land, are easily assessed.  Tax on interest or money is difficult to calculate without extraordinary “inquisition” into every man’s private circumstances and “would be a source of such continual and endless vexation as no people could support.”

“There is no art which one government sooner learns of another, than that of draining money from the pockets of the people.”

Wages on the “inferior classes of workmen” are regulated by demand for labor and the price of provisions.  As taxes on labor go up, wages must go up more, to cover the additional tax.  Manufacturers can pass these costs on to the consumer, but farmers’ landlords must absorb them.  This leads to a decrease in the demand for labor.  “Absurd and destructive as such taxes are, however, they take place in many countries.”

Smith goes into government jobs, which are much sought after, because they are highly paid and carry perquisites (perks).  Taxes on luxuries do not raise the price of other commodities, but those on necessities do, so should not be taxed. He mentions alcohol taxes as by far the most productive.

Excise taxes are generally on home goods destined for home markets and imposed on only certain items of the most general use. Excise laws discourage smuggling more effectively than customs laws.

He acknowledges that poor people, because there are more of them, consume the most, not only in quantity, but in value.

He mentions that war has required even the most frugal republics to contract great debts to maintain independence.  He says it is incorrect to assume money lent to government increases capital, because it is generally wasted, and that money would otherwise be spent on productive labor.  Also, foreigners often buy in.

“When national debts have once been accumulated to a certain degree, there is scarce, I believe, a single instance of their having been fairly and completely paid.”

Wealth ends rather abruptly on the subject of public debt, saying that when it exceeds taxpayers’ ability to pay with reasonable measures, government uses unreasonable measures, such as issuing interest-free bonds for immediate expenses, or interest-only bonds that are never intended to be repaid.  He says this has “enfeebled” multiple governments.

When governments reach the point where they can’t pay the debt, they either inflate the currency or declare bankruptcy.  He says the latter is more honest, but says the entire system of debt-backed government is “pernicious.”

My take is the tradition of monarchs and overlords has led to societies in which unearned wealth is glorified and held in high esteem.  The most highly respected and emulated are those who have done the least to acquire what they have, in general terms. The very idea, The Wealth of Nations, presumes the nations own the individuals who live within their borders.

 

 

 

Monsanto and Bayer Merged

The following is re-blogged from Justice4Poland.com, a good site for updates on the chemicals and pharmaceutical industries.

June 7, 2018 GMO Fact Check Bayer’s buyout of the biotech giant will allow Monsanto to hide in the shadows. Action Alert! Bayer, the German pharmaceutical company, is wrapping up a $63 billion dollar purchase of Monsanto, and has said that it will retire Monsanto’s name. It will become impossible to know which products are […]

via Monsanto is Finally Gone…But Not in a Good Way — Justice4Poland.com

Hamilton’s Legacy

As the rich get richer and the poor get poorer, pundits and philosophers theorize about the problems of income inequality, social stratification, and legal injustice.  Proposed solutions flow thick and fast, most advocating government intervention or denouncing government de-regulation since the Great Depression.

The American myth of freedom, democracy, and capitalism dies hard, but the United States has never been free, democratic, or even capitalistic, unless it was before the Europeans arrived.  Stratification of society was built into the system with the arrival of the English and their traditions of monarchs and minions, the French and Spanish, and their long histories of battle and inbreeding among themselves on the European continent.

The American experiment may have represented a break from the past, but it carried with it the same patriarchal patterns of its forebears.  The “Founding Fathers” ultimately adopted a government structure that varied only slightly from that of its British progenitors.

Many US citizens don’t know the difference between the Declaration of Independence, which we celebrate on July 4 every year, and the Constitution, which was drafted in secrecy and signed on September 17, 1787, over eleven years after the Declaration announced the United States’ independence from Britain.

In that eleven year gap, the Revolutionary War had been fought and won.  The now free colonies were struggling with debts to soldiers, domestic, and foreign investors.  The individual states had taxing power, but the loosely formed union did not.  Some states were paying off their debts, but others were lagging.  John Adams had been sent to London to negotiate credit for the fledgling country, and Thomas Jefferson had been sent to France for the same purpose, to replace Benjamin Franklin, who was aging and ill.

James Madison of Virginia and Alexander Hamilton of New York led the effort to revise the Articles of Confederation with a new Constitution that would create a strong central government, supersede state governments, and have the taxing power to pay war debts.  Once gathered at what became the Constitutional Convention in Philadelphia, though, each delegate learned the intent was to completely re-write the Articles and was sworn to strict secrecy. George Washington was unanimously elected president.  Madison sat by his side taking notes and was later acknowledged as having written the Constitution.  Alexander Hamilton was a strong advocate for a centralized government, brilliant and opinionated, an open admirer of the British model, including the monarchy, and wanted to reproduce the British system in the states.  He also extolled wealth and privilege, claiming the masses could not be trusted to manage their own affairs.  Madison was of the same general opinion.

While he initially opposed the Constitution, Hamilton later became its strongest advocate and promoter.  He induced Madison and John Jay to write with him what became the Federalist Papers, a series of anonymous essays distributed to newspapers to promote ratification by the states.  For ratification, the Philadelphia conventioneers chose to bypass state legislatures and rely on specifically convened  ratification conventions.

Hamilton played an early and profound role in shaping the early American government.  According to his biographer, Ron Chernow*, he was an illegitimate child of a dissolute couple, born in 1755 or 1757 on the British island of Nevis in the West Indies.  After his father abandoned the family and his mother died, he was employed at age 13 as a clerk and bookkeeper for wealthy British traders on St. Croix, also in the West Indies.  His employers traded in a variety of goods, but at least one shipment a year was of African slaves.  Those employers eventually financed Hamilton’s migration to the New York colony in 1773, where periodic shipments of slave-produced sugar covered his expenses.

Hamilton, who was dashing and gifted, quickly made his way into New York society, courting and marrying a daughter, Elizabeth, of the prominent Philip Schuyler.  He enlisted in George Washington’s Continental Army, gained Washington’s confidence and became his personal secretary during the Revolutionary War years.  Later, Washington granted him his one and only command, at the battle of Yorktown, where Continental and French forces defeated British General Cornwallis to win the Revolutionary War.

After the war ended, Hamilton practiced law in New York City and involved himself in politics.    He also involved himself in banking, writing the constitution for the Bank of New York in 1784, as agent for his brother-in-law, John B. Church, who was in Britain acting as a member of Parliament.  It was New York’s first bank and exists today as BNY-Mellon, billed as having the longest continually traded stock on the New York Stock Exchange.

After the Constitution was ratified, George Washington became the first US president, elected in 1788.  John Adams was elected vice president, and Hamilton became Washington’s first Treasury Secretary.  Thomas Jefferson, who was still in France, was appointed Secretary of State and confirmed by the Senate before he knew of his appointment.

Hamilton went to work immediately to take control of the nation’s finances.  The day after his confirmation as Secretary of the Treasury, he arranged for a $50,000 loan from the Bank of New York—of which he was a director–to pay salaries of Washington and Congress.  He then arranged for another $50,000 loan from the Bank of North America.  The Hamilton Tariff Act of 1789 was Congress’ second official move, after establishing rules for taking oaths of office.

By 1790, Hamilton was busy working on a plan for the federal government to assume state debts from the Revolutionary War.  In the Constitutional Convention the question of assumption had split—like the slavery issue—essentially along North-South lines, because Southern states had paid off much of their debt, while northern states, like New York, had not.  The issue dovetailed with questions about the ultimate location of the nation’s capital.  Madison, silently backed by George Washington, negotiated for a Potomac River location near Washington’s Mount Vernon plantation in exchange for agreeing that the federal government would assume the states’ debt.

Meanwhile, Hamilton was busy creating the First Bank of the United States, a central bank that could issue credit, capitalized at $10 million, 20% owned by the government and 80% owned by shareholders.  He was also looking for other sources of income and convinced Washington and Congress to support an excise tax on whiskey.  He introduced legislation for the whiskey tax on December 13, 1790 and for the central bank December 14, 1790.  At that point, Washington’s main source of income came from whiskey distillation.

Both James Madison and Thomas Jefferson vigorously opposed the central bank, calling it unconstitutional.  Madison and Hamilton had been allies before, but this difference in interpretation of the Constitution caused a rift that never healed.  Jefferson and Madison wrote letters back and forth condemning the mad stock speculation that greeted the public offering of central bank stock, and the fact that people in the Northeast could talk of nothing else.  Once again, critics claimed Hamilton demonstrated a preference for rich Northerners, as he only offered the stock through three banks, in Boston, New York, and Philadelphia.  Also, opponents pointed to the fact that three-fourths of investors were foreign.  Thirty of the approximately 85 Congressmen bought shares.

Hamilton’s assistant Treasury Secretary, William Duer, could be called one of the nation’s first inside traders.  Philip Schuyler, who would become Hamilton’s father-in-law, had previously done business with Duer and had encouraged him to move from Antigua to New York.  Duer became an early friend when Hamilton immigrated to the continent.  But Duer turned out to be an inveterate gambler and stock speculator who was blamed for causing the Panic of 1892 through debt-backed stock speculation in First Bank of the United States stock. His method was to borrow heavily to make trades, hoping to sell at peak prices, but he ran out of cash and couldn’t make payments on his debts.  People panicked and started selling stock.  Hamilton then used the Treasury’s sinking fund to buy government securities anonymously, to stem the panic.

As a result of the crisis, to restore confidence, and to encourage people to start investing again, 24 stock brokers and merchants formed the New York Stock Exchange in May, 1792, by signing the so-called “Buttonwood Agreement,” under a buttonwood tree on Wall Street.  The signers agreed to trade only with each other, and to charge one-quarter percent commission on trades.  Available stock was limited to insurance companies, the Bank of New York, the First Bank of the United States, and Hamilton Bonds that Hamilton had decided to issue to pay Revolutionary War debt.

The United States has operated as a triumvirate of government, banking, and the stock market ever since.  The “Framers” of the Constitution were wealthy businessmen, planters, bankers, lawyers, and merchants, who designed a structure for exerting control over the population through laws and taxation.  While the Declaration of Independence set the states free, the Constitution bound them in economic slavery to a new taxing authority.  The links to the banking system and the New York Stock Exchange initiated the “public-private partnerships” that define the United States today.

If, in the 21st century the rich are getting richer and the poor getting poorer, it’s probably fair to say it was designed that way.  The Framers knew what they were doing.

 

*  The recent Broadway hit Hamilton is based on Chernow’s book, Alexander Hamilton, 2004.

It’s a Dog’s Life

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What is it about dogs?  In my long life, I have lived in too-close proximity to barking dogs, biting dogs, dogs that get in the trash cans, and dogs that poop and dig holes in the yard.  A dog killed my chicken, and another dog killed my cat.

I have been known to drive up a neighbor’s driveway at 3 a.m., blowing my horn and banging on the door until the dog owner answered.  I have yelled loud enough to be heard over the still-barking dog, which had a habit of keeping me awake for hours every night.  Those neighbors soon moved away, but in karmic retaliation, new neurotic neighbors with two barking dogs moved in.  The Yapper and the Woofer have prompted this complaint.

There are advantages to having neighbors who believe you are crazy.  Being crazy is easier than calling the police.  If I called, and police came at all, I imagine they would keep me awake even longer asking questions and filling out forms, and finally, not solving the problem.  No.  Police are worse than useless in situations like this.

From my perspective, there is nothing good about dogs, but other people like them, and they are legal, unlike my roosters.  Before I got roosters who like to crow, I was more likely to call neighbors to complain about their barking dogs.  Now, I have to play nicer, because the roosters are sort of illegal, meaning the county has decided not to enforce the anti-rooster ordinance unless neighbors object.

So, I’ve visited neighbors and asked them to let me know first if the roosters bother them.  Most don’t hear anything.  Those who do say they like the countrified sound of roosters crowing, so we are safe for now, as long as I keep the dogs away.

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Speckles crowing

My most effective dog-control strategy so far has been to bypass dog owners and develop a relationship with the dogs themselves.  When barking has continued too long, I start commiserating, telling the dogs how sorry I feel for them.  Their owners must really hate them, I yell, and I can understand why.  There is nothing good about dogs.  They are obnoxious and have no life.  I’ll bet their owners don’t feed them or give them water.  They are mean, neurotic people.  Poor dogs.

This has been known to quiet the dogs a few minutes.  Then I praise them, saying they are capable of learning something, after all.  They have at least one redeeming feature.  “Good dogs,” I say.  This gets them barking, again, but the barking doesn’t last long.

Then the roosters start crowing.

 

 

 

 

 

 

Waste Not . . .

The plastics industry is the third largest manufacturing industry in the United States.  In fact, the US hosts half of the world’s top fifty plastics manufacturing companies.  Sales in 2014 were over $961 billion, with the US holding a sizable trade surplus in plastics.  Demand continues to rise, with consumption between 2011 and 2012 going up 5.7 percent.

Since its basic component is mineral oil, plastic is considered a petrochemical.  Some of the largest plastics manufacturers are household names in the US, including Exxon Mobil, Dow Chemicals, and Chevron Phillips.

In developed countries like the US, a third of plastics goes into packaging.  Another third is used in buildings, such as pipes, plumbing, and vinyl siding.  Other uses include toys, furniture, cars, and medical equipment, among other things.

Thanks to the fracking boom, the US is now one of the cheapest places in the world to manufacture plastics.  The chemical industry plans to spend $185 billion in the next few years to expand its capacity.  Four new plastics plants were slated to begin operations in the US in 2017.

At the same time, the US’ main export to China is—or has been—trash, including plastic trash.  It is a multi-billion dollar industry.  Since the 1980’s China has been the world’s largest importer of waste.  By 2012 56% of global exported plastic waste ended up in China, but lack of oversight led to major environmental and health problems.  Also, China’s middle class has started discarding enough waste so that the Chinese no longer need imported garbage. So, as of January 1, 2018, China has imposed a ban on imported waste.

According to the New York Times of January 11, 2018, “Plastics Pile Up as China Refuses to Take the West’s Recycling.”  According to the article, Canada, Ireland, Germany, Britain, and Hong Kong have reported backups in their waste.  Steve Frank, of Pioneer Recycling in Oregon is looking to export to Indonesia, India, Vietnam, and Malaysia.  In Britain, Jacqueline O’Donovan of O’Donovan Waste Disposal also exports and reports huge bottlenecks.  China’s ban covers 24 kinds of solid waste and sets new limits on impurities.  China notified the WTO last year it would ban some imports because of contaminants, including hazardous materials.

Germany leads the world in recycling, at 70%.  Americans generate 4.4 pounds per person per day of trash, and generate the most waste in the world, but Americans only recycle 34% of waste and only 9.5% of plastic.  Fifteen percent is burned for electricity and/or heat.  About one-third is exported, and until the ban began, half of that went to China.  The remainder goes to landfill.  It is estimated that it takes 500 years for plastic to break down.  As it does, it leaches toxic components into the ground.  But many US landfill sites are old and fast reaching capacity.

China has the highest carbon emissions in the world, as of 2011, but it also has the largest population.  The United States (third in population), Russia and India (second in population) are the next largest carbon emitters.  Emissions have grown faster than population since 1950.  Since 2000, emissions have grown twice as fast as population.

China, which has a longstanding problem with pollution, is making comprehensive efforts to improve its air and water quality.  Beijing has started promoting green technology, including waste-to-energy incineration.  With WTE, China’s stated priority is trash disposal rather than energy production.

Waste-to-energy (WTE) is a process by which trash is burned to generate electricity, steam, or both.  According to Wikipedia, the first waste incinerator was built in the United Kingdom in 1874.  The first in the US came on line in 1885 on Governor’s Island, New York.  Burning reduces original waste volume by 90-95%. The plants produce electric efficiencies of 14-28%.  Or, water is boiled to power steam generators.  Co-generation can increase efficiency to 80%.

WTE must meet strict emission requirements for nitrous oxides (NOx), sulfur dioxide (SO2), heavy metals and dioxins, based on worldwide emissions standards set by the Organization for Economic Cooperation and Development (OECD), an inter-governmental economic organization with 35 member countries, founded in 1961.

The plants may emit low levels of particulates, heavy metals, trace dioxin, and acid gas.  There’s also toxic fly ash (which requires hazardous waste disposal installation) and incinerator bottom ash, which must be reused properly.  Lime scrubbers reduce acid gas.  Electrostatic precipitators, fabric filters, reactors and catalysts are also used.  In WTE, filters capture mercury and lead. However, even controls can’t eliminate all the dioxin, according to some claimants.

Proponents say the plants emit the same amount of nitrous oxide as coal-fired plants and have the same requirements, but WTE plants emit fewer particulates than coal.

Some European countries burn half of their waste.  Cost for the facilities can be prohibitive, at up to $1 billion.  There are 87 operational WTE facilities in the US, 431 in Europe, and 330-439 in China, depending on the internet source.* Japan is the biggest user of WTE in the world.  It burns 40 million tons of municipal solid waste annually.

Because Germans generate so little waste, the country’s WTE plants lack enough trash to supply its electricity generators.  It imports trash from the UK, Italy, and Switzerland.  Sweden imports trash, too.

The largest waste-to-energy plant in the world is currently under construction in Shenzhen, China, but protesters have succeeded in getting a delay in the project.  Babcock and Wilcox Voland of Denmark has the $40 million contract to design a 168 megawatt boiler that will consume 5600 tons/day of trash.  The roof is to be covered with solar panels.  It is expected to recover 95% of water and 90% of metals, with slag recycled as gravel.  Flue gas is expected to be 95-99% clean.  An even larger WTE plant is being planned in Dubai, capital of the United Arab Emirates, with construction scheduled to begin later in 2018.  It is projected to produce 185 megawatts.

The EPA says the US sent 33.66 million tons of waste for conversion to energy in 2013.  Fifty percent of facilities are privately owned, with Covanta Energy and Wheelabrator Labs the largest.  Most produce electricity only, and 25% produce electricity and stream.  A handful produce only steam.  Twelve states have operating WTE plants.  Florida has the most, at twelve, then New York (10), Massachusetts (7), Pennsylvania and Connecticut (6 each), Virginia and Delaware (5 each).  California, Maryland, Wisconsin, Michigan, and Maine have three.

The largest WTE facilities in the US produce over 90 megawatts of electricity and consume around 3000 tons/day of waste.  They each serve around one million people.

In the US, the first WTE plant in 20 years opened in Florida in 2015.  It consumes 3000 tons/day of waste and cost $670 million.  The Palm Beach Renewable Energy Facility in West Palm Beach, Florida is publicly owned by the Solid Waste Authority of Palm Beach, County and operated by Babcock and Wilcox, an international firm out of Denmark.  It is a mass burn facility and produces 95 megawatts. Advocates stress the idea that waste is a resource.

However, the new plant is not getting the loads it expected.  The county already had a WTE plant, in operation since 1989.  There was a fear that landfill would reach capacity around 2022-2023, so the new plant received little public resistance.  There are substantial controls on emissions.  Emission requirements allow for 110 pounds of mercury/year.  The price of the electricity is competitive.  They test for the toxicity of the ash.

An argument against incinerators is that they compete with recycling. Recycling has increased three-fold over the 1980s.  Still, it’s cheaper to make new paper than to recycle, and China’s new ban on trash imports includes mixed paper.

There is a $1 billion facility planned for Baltimore, but it is meeting with public resistance.  Opponents object to emissions so close to a school and blame WTE facilities in Detroit and Harrisburg, PA for those cities’ bankruptcies.  However, WTE industry representatives claim that Harrisburg continued to refinance its facility and to pull cash out for the general fund.  The cost went from $15 to $240 million.  The plant sold for $130 million.

The trajectory of plastics from production to disposal presents a growing problem worldwide, including in the oceans, where huge “gyres,” of floating debris have formed in five separate locations.  The best known is the “Great Pacific Garbage Dump,” which some say is at least the size of Texas.  If there were ever an industry looking for jobs, the pollution control industry would be one of them.

* A problem with internet research is that data is often old, sometimes without posted dates. Some is promotional (so possibly biased), often superficial, and hard to verity.

A Stinky Subject

This isn’t about sex, murder, war, politics, or Donald Trump, so if that’s all that interests you, you may as well stop reading now.  It’s about landfill gas recapture and utilization, a subject that makes my engineering friends yawn but fascinates me.

It links my interests in environmental toxins, garbage disposal, and multi-purpose innovation to address commonly acknowledged problems.  While the political scientists debate whether the Earth is undergoing “climate change” and, if so, whether humankind is causing it, I’m looking at litter in the streets; noting the extraordinary growth of plastic and single use packaging; and throwing away heaps of junk mail in post office recycling bins.  At least the PO has recycling bins, a forward shift in consciousness, according to me, within the past ten years.  Not only does the post office subsidize this mountain of murdered trees by reduced rates, but my various alma maters and professional organizations are the worst perpetrators of this global plot to deforest the planet and speed up the global warming agenda.  One would think the ivory-tower elitists would be the first to rail against this glut of self-serving propaganda, but alas, they can’t afford to support their tenured positions and building campaigns with mere tuitions.  They must perpetually dun their graduates—and their graduates’ offspring—for money, if only to prove how cost-ineffective and eco-unfriendly they are.

So, rather than spend money supporting those who can’t support themselves, I choose to educate myself without cost in ways to reduce all my problems and the world’s problems at the same time.  A tall order, perhaps, and maybe a futile one, considering the stinky subject of landfill.  Nobody wants to touch it, unless, of course they can get government funding.

To get government funding, one is obliged to package the idea in terms that make the government look good.  For instance, did you know the United States has 2000 regulated landfills, the most in the world?  By 2006, the US generated 413 million tons of municipal solid waste, and 64% went into landfill.  70 percent of this was composed of food, paper, and corrugated cardboard, and 15 percent was of petrochemicals, mostly plastic.

Biogas, including carbon dioxide and methane, are emitted from decomposition of organic materials in landfill.  Aerobic decomposition of waste generally leads to the production of carbon dioxide (CO2), and anaerobic decomposition produces methane (CH4). Methane is also known as natural gas. MSW (municipal solid waste) landfill gas is comprised of 45-60% methane and 40-60% CO2.

Methane is believed to be at least 24 times more potent than carbon dioxide in its global warming effects.  About 50 million tons of methane are generated annually by municipal solid waste, but only 5 million tons are captured.

Landfills generate a maximum of methane at five years, then the amount begins to decline.  Landfill gas utilization is a process by which methane is captured and used to generate electricity or heat, or upgraded for inclusion in commercial natural gas products.  In 2006, there were 325 landfills in the US that collected biogas, up from 231 in 1999.  California had the most:  65 landfill gas facilities, followed by Illinois, Michigan, New York, and Pennsylvania.  In 2001, there were 955 landfills that recovered biogas, with the most in the United States, followed by Germany and the United Kingdom.  In the United Kingdom, the number of facilities went from 329 in 2005 to 519 in 2009.

There are two methods for capture of methane from landfill, closed and open capture.  Closed capture refers to gas extraction from landfills that have been closed and can be capped.  It is considered more efficient than capture from open landfills, at 84% and 67% respectively.  Methods for capture including drilling wells either vertically or horizontally.  Equipment needed for utilization depends on the size of the landfill.  Smaller facilities can employ reciprocating engines; medium-sized facilities can use turbines; and steam cycles are used for the largest deposits.

General Motors has significantly reduced its energy costs by using landfill gas to power some of its production facilities.  As of August, 2016, the General Motors Orion plant in the Orion Township of Michigan boasted that landfill gas was supplying 54% of its electricity.  The gas comes from two open landfills nearby, owned by Waste Management and Republic Services, respectively.  The GM plant also has a 350 kW solar array.

There are incentives from the Treasury Department, Department of Energy, the Agriculture Department, and the Department of Commerce for landfill gas extraction.  Landfill gas is considered a renewable form of energy.  The US EPA operates a landfill Methane Outreach Program.

Opponents of landfill gas utilization include such organizations as the Energy Justice Network, which claims that landfill gas has contaminants that are either inherently toxic or combine into toxic substances when burned.  Although “non-methane organic compounds” (NMOCs) comprise less than one percent of landfill gas, there are also non-organic toxic substances, such as mercury and tritium, in minute amounts.  Also, when halogens–like chlorine, fluorine, and bromine– are combusted with hydrocarbons, they can produce dioxins and furans, some of the most toxic substances known.  While other sources state that a burning temperature of 850 degrees centigrade can destroy dioxins, Energy Justice Network claims these can be re-formed in the cooling process.

At the same time, Energy Justice Network admits that methane is responsible for 10.6 percent of global warming from US human sources, with 35.8 percent of this from landfill gas.  It also claims that if landfill gas is to be utilized for energy, boilers offer the safest mode, with turbines, then internal combustion engines less desirable.