Black Crawling Systems Archive Release 1.0/Black Crawling Systems Archive Release 1.0 (L0pht Heavy Industries, Inc.)(1997).ISO/tezcat/Financial/Commercial_Credit

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                        The Commercial Credit System

When Congress borrows money on the credit of the United States, bonds are
thus legislated into existence and deposited as credit entries in Federal
Reserve banks.  United States bonds, bills and notes constitute money as
affirmed by the Supreme Court (Legal Tender Cases, 110 U.S. 421), and this
money when deposited with the Fed becomes collateral from whence the
Treasury may write checks against the credit thus created in its account (12
USC 391).  For example, suppose Congress appropriates an expenditure of $1
billion.  To finance the appropriation Congress creates the $1 billion worth
of bonds out of thin air and deposits it with the privately owned Federal
Reserve System.  Upon receiving the bonds, the Fed credits $1 billion to the
Treasury's checking account, holding the deposited bonds as collateral.
When the United States deposits its bonds with the Federal Reserve System,
private credit is extended to the Treasury by the Fed.  Under its power to
borrow money, Congress is authorized by the Constitution to contract debt,
and whenever something is borrowed it must be returned.  When Congress
spends the contracted private credit, each use of credit is debt which must
be returned to the lender or Fed.  Since Congress authorizes the expenditure
of this private credit, the United States incurs the primary obligation to
return the borrowed credit, creating a National Debt which results when
credit is not returned.  However, if anyone else accepts this private credit
and uses it to purchase goods and services, the user voluntarily incurs the
obligation requiring him to make a return of income whereby a portion of the
income is collected by the IRS and delivered to the Federal Reserve bankers.
Actually the federal income tax imparts two separate obligations:  the
obligation to file a return and the obligation to abide by the Internal
Revenue Code.  The obligation to make a return of income for using private
credit is recognized in law as an irrecusable obligation, which according to
'Bouvier's Law Dictionary' (1914 ed.), is "a term used to indicate a certain
class of contractual obligations recognized by the law which are imposed
upon a person without his consent and without regard to any act of his own."
This is distinguished from a recusable obligation which, according to
Bouvier, arises from a voluntary act by which one incurs the obligation
imposed by the operation of law.  The voluntary use of private credit is the
condition precedent which imposes the irrecusable obligation to file a tax
return.  If private credit is not used or rejected, then the operation of
law which imposes the irrecusable obligation lies dormant and cannot apply.

In 'Brushaber v. Union Pacific RR Co.' 240 U.S. 1 (1916) the Supreme Court
affirmed that the federal income tax is in the class of indirect taxes,
which include duties and excises.  The personal income tax arises from a
duty -- i.e., charge or fee -- which is voluntarily incurred and subject to
the rule of uniformity.  A charge is a duty or obligation, binding upon him
who enters into it, which may be removed or taken away by a discharge
(performance):  'Bouvier', p. 459.  Our federal personal income tax is not
really a tax in the ordinary sense of the word but rather a burden or
obligation which the taxpayer voluntarily assumes, and the burden of the tax
falls upon those who voluntarily use private credit.  Simply stated the tax
imposed is a charge or fee upon the use of private credit where the amount
of private credit used measures the pecuniary obligation.  The personal
income tax provision of the Internal Revenue Code is private law rather than
public law.  "A private law is one which is confined to particular
individuals, associations, or corporations":  50 AmJur 12, p.28.  In the
instant case the revenue code pertains to taxpayers.  A private law can be
enforced by a court of competent jurisdiction when statutes for its
enforcement are enacted:  20 AmJur 33, pgs. 58, 59.  The distinction
between public and private acts is not always sharply defined when published
statutes are printed in their final form:  Case v. Kelly 133 U.S. 21
(1890).  Statutes creating corporations are private acts:  20 AmJur 35, p.
60.  In this connection, the Federal Reserve Act is private law.  Federal
Reserve banks derive their existence and corporate power from the Federal
Reserve Act:  Armano v. Federal Reserve Bank 468 F.Supp 674 (1979).  A
private act may be published as a public law when the general public is
afforded the opportunity of participating in the operation of the private
law.  The Internal Revenue Code is an example of private law which does not
exclude the voluntary participation of the general public.  Had the Internal
Revenue Code been written as substantive public law, the code would be
repugnant to the Constitution, since no one could be compelled to file a
return and thereby become a witness against himself.  Under the fifty titles
listed on the preface page of the United States Code, the Internal Revenue
Code (26 USC) is listed as having not been enacted as substantive public
law, conceding that the Internal Revenue Code is private law.  Bouvier
declares that private law "relates to private matters which do not concern
the public at large." It is the voluntary use of private credit which
imposes upon the user the quasi contractual or implied obligation to make a
return of income.  In 'Pollock v. Farmer's Loan & Trust Co.' 158 U.S. 601
(1895) the Supreme Court had declared the income tax of 1894 to be repugnant
to the Constitution, holding that taxation of rents, wages and salaries must
conform to the rule of apportionment.  However, when this decision was
rendered, there was no privately owned central bank issuing private credit
and currency but rather public money in the form of legal tender notes and
coins of the United States circulated.  Public money is the lawful money of
the United States which the Constitution authorizes Congress to issue,
conferring a property right, whereas the private credit issued by the Fed is
neither money nor property, permitting the user an equitable interest but
denying allodial title.

Today, we have two competing monetary systems.  The Federal Reserve System
with its private credit and currency, and the public money system consisting
of legal tender United States notes and coins.  One could use the public
money system, paying all bills with coins and United States notes (if the
notes can be obtained), or one could voluntarily use the private credit
system and thereby incur the obligation to make a return of income.  Under
26 USC 7609 the IRS has carte blanche authority to summon and investigate
bank records for the purpose of determining tax liabilities or discovering
unknown taxpayers:  'United States v. Berg' 636 F.2d 203 (1980).  If an
investigation of bank records discloses an excess of $1000 in deposits in a
single year, the IRS may accept this as prima facie evidence that the
account holder uses private credit and is therefore a person obligated to
make a return of income.  Anyone who uses private credit -- e.g., bank
accounts, credit cards, mortgages, etc. -- voluntarily plugs himself into
the system and obligates himself to file.  A taxpayer is allowed to claim a
$1000 personal deduction when filing his return.  The average taxpayer in
the course of a year uses United States coins in vending machines, parking
meters, small change, etc., and this public money must be deducted when
computing the charge for using private credit.

On June 5, 1933, the day of infamy arrived.  Congress on that date enacted
House Joint Resolution 192, which provided that the people convert or turn
in their gold coins in exchange for Federal Reserve notes.  Through the
operation of law, H.J.R. 192 took us off the gold standard and placed us on
the dollar standard where the dollar could be manipulated by private
interests for their self-serving benefit.  By this single act the people and
their wealth were delivered to the bankers.  When gold coinage was thus
pulled out of circulation, large denomination Federal Reserve notes were
issued to fill the void.  As a consequence the public money supply in
circulation was greatly diminished, and the debt-laden private credit of the
Fed gained supremacy.  This action made private individuals who had been
previously exempt from federal income taxes now liable for them, since the
general public began consuming and using large amounts of private credit.
Notice all the case law prior to 1933 which affirms that income is a profit
or gain which arises from a government granted privilege.  After 1933,
however, the case law no longer emphatically declares that income is
exclusively corporate profit or that it arises from a privilege.  So, what
changed? Two years after H.J.R. 192, Congress passed the Social Security
Act, which the Supreme Court upheld as a valid act imposing a valid income
tax:  'Charles C. Steward Mach. Co. v, Davis' 301 U.S. 548 (1937).

It is no accident that the United States is without a dollar unit coin.  In
recent years the Eisenhower dollar coin received widespread acceptance, but
the Treasury minted them in limited number which encouraged hoarding.  This
same fate befell the Kennedy half dollars, which circulated as silver
sandwiched clads between 1965-1969 and were hoarded for their intrinsic
value and not spent.  Next came the Susan B.  Anthony dollar, an awkward
coin which was instantly rejected as planned.  The remaining unit is the
privately issued Federal Reserve note unit dollar with no viable
competitors.  Back in 1935 the Fed had persuaded the Treasury to discontinue
minting silver dollars because the public preferred them over dollar bills.
That the public money system has become awkward, discouraging its use, is no
accident.  It was planned that way.

A major purpose behind the 16th Amendment was to give Congress authority to
enforce private law collections of revenue.  Congress had the plenary power
to collect income taxes arising from government granted privileges long
before the 16th Amendment was ratified, and the amendment was unnecessary,
except to give Congress the added power to enforce collections under private
law:  i.e., income from whatever source.  So, the Fed got its amendment and
its private income tax, which is a banker's dream but a nightmare for
everyone else.  Through the combined operation of the Fed and H.J.R. 192,
the United States pays exorbitant interest whenever it uses its own money
deposited with the Fed, and the people pay outrageous income taxes for the
privilege of living and working in their own country, robbed of their wealth
and separated from their rights, laboring under a tax system written by a
cabal of loan shark bankers and rubber stamped by a spineless Congress.

Congress has the power to abolish the Federal Reserve System and thus
destroy the private credit system.  However, the people have it within their
power to strip the Fed of its powers, rescind private credit and get the
bankers to pay off the National Debt should Congress fail to act.  The key
to all this is 12 USC 411, which declares that Federal Reserve notes shall
be redeemed in lawful money at any Federal Reserve bank.  Lawful money is
defined as all the coins, notes, bills, bonds and securities of the United
States:  'Julliard v. Greenman' 110 U.S. 421, 448 (1884); whereas public
money is the lawful money declared by Congress as a legal tender for debts
(31 USC 5103); 524 F.2d 629 (1974).  anyone can present Federal Reserve
notes to any Federal Reserve bank and demand redemption in public money --
i.e., legal tender United States notes and coins.  A Federal Reserve note is
a fixed obligation or evidence of indebtedness which pledges redemption (12
USC 411) in public money to the note holder.  The Fed maintains a ready
supply of United States notes in hundred dollar denominations for redemption
purposes should it be required, and coins are available to satisfy claims
for smaller amounts.  However, should the general public decide to redeem
large amounts of private credit for public money, a financial melt-down
within the Fed would quickly occur.  The process works like this.  Suppose
$1000 in Federal Reserve notes are presented for redemption in public money.
To raise $1000 in public money the Fed must surrender U.S. Bonds in that
amount to the Treasury in exchange for the public money demanded (assuming
that the Fed had no public money on hand).  In so doing $1000 of the
National Debt would be paid off by the Fed and thus cancelled.  Can you
imagine the result if large amounts of Federal Reserve notes were redeemed
on a regular, ongoing basis? Private credit would be withdrawn from
circulation and replaced with public money, and with each turning of the
screw the Fed would be obliged to pay off more of the National Debt.  Should
the Fed refuse to redeem its notes in public money, then the fiction that
private credit is used voluntarily would become unsustainable.  If the use
of private credit becomes compulsory, then the obligation to make a return
of income is voided.  If the Fed is under no obligation to redeem its notes,
then no one has an obligation to make a return of income.  It is that
simple! Federal Reserve notes are not money and cannot be tendered when
money is demanded:  105 So. 305 (1925).  Moreover, the Ninth Circuit
rejected the argument that a $50 Federal Reserve note be redeemed in gold or
silver coin after specie coinage had been rescinded but upheld the right of
the note holder to redeem his note in current public money (31 USC 392;
rev., 5103):  524 F.2d 629 (1974); 12 USC 411.

It would be advantageous to close out all bank accounts, acquire a home
safe, settle all debts in cash with public money and use U.S. postal money
orders for remittances.  Whenever a check is received, present it to the
bank of issue and demand cash in public money.  This will place banks in a
vulnerable position, forcing them to draw off their assets.  Through their
insatiable greed, bankers have over extended, making banks quite illiquid.
Should the people suddenly demand public money for their deposits and for
checks received, many banks will collapse and be foreclosed by those
demanding public money.  Banks by their very nature are citadels of usury
and sin, and the most patriotic service one could perform is to obligate
bankers to redeem private credit.  When the first Federal Reserve note is
presented to the Fed for redemption, the process of ousting the private
credit system will commence and will not end until the Fed and the banking
system nurtured by it collapse.  Coins comprise less than five percent of
the currency, and current law limits the amount of United States notes in
circulation to $300 million (31 USC 5115).  The private credit system is
exceedingly over extended compared with the supply of public money, and a
small minority working in concert can easily collapse the private credit
system and oust the Fed by demanding redemption of private credit.  If the
Fed disappeared tomorrow, income taxes on wages and salaries would vanish
with it.  Moreover, the States are precluded from taxing United States
notes:  4 Wheat. 316.  According to Bouvier, public money is the money which
Congress can tax for public purposes mandated by the Constitution.  Private
credit when collected in revenue can fund programs and be spent for purposes
not cognizable by the Constitution.  We have in effect two competing
governments:  the United States Government and the Federal Government.  The
first is the government of the people, whereas the Federal Government is
founded upon private law and funded by private credit.  What we really have
is private government.  Federal agencies and activities funded by the
private credit system include Social Security, bail out loans to bankers via
the IMF, bail out loans to Chrysler, loans to students, FDIC, FBI,
supporting the U.N., foreign aid, funding undeclared wars, etc., all of
which would be unsustainable if funded by taxes raised pursuant to the
Constitution.  The personal income tax is not a true tax but rather an
obligation or burden which is voluntarily assumed, since revenue is raised
through voluntary contributions and can be spent for purposes unknown to the
Constitution.  Notice how the IRS declares in its publications that everyone
is expected to contribute his fair share.  True taxes must be spent for
public purposes which the Constitution recognizes.  Taxation for the purpose
of giving or loaning money to private business enterprises and individuals
is illegal:  15 AmRep 39; Cooley, 'Prin. Const. Law', ch. IV.  Revenue
derived from the federal income tax goes into a private slush fund raised
from voluntary contributions, and Congress is not restricted by the
Constitution when spending or disbursing the proceeds from this private
fund.  It is incorrect to say that the personal federal income tax is
unconstitutional, since the tax code is private law and resides outside the
Constitution.  The Internal Revenue Code is non-constitutional because it
enforces an obligation which is voluntarily incurred through an act of the
individual who binds himself.  Fighting the Internal Revenue Code on
constitutional grounds is wasted energy.  The way to bring it all down is to
attack the Federal Reserve System and its banking cohorts by demanding that
private credit be redeemed, or by convincing Congress to abolish the Fed.
Never forget that private credit is funding the destruction of our country.

[Reprinted from `Freedom League', Sept/Oct 1984]
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