Economic Collapse, July 1930

Prohibition caused Depression

Chicago Tribune 17NOV1930

The stock market crash of 1929 marked the realization that prohibition laws would soon destroy the US economy and banking system. By mid-1930, financial collapse was so well underway that the old prohibition enforcement districts were redrawn to conform closely to existing Federal Reserve districts. This change took effect on July 1, 1930, the month Cook County Assessor Gene G. Oliver was convicted of tax evasion and sentenced to 18 months in prison and fined $12,500 by Judge Woodward in Chicago.

Here is a breakdown of the districts.

The transfer of the prohibition enforcement activity from the Treasury Department to the Department of Justice under the Williamson Act took place on July 1, 1930, under the Bureau of Industrial Alcohol in the Treasury Department, retained the duty of issuing permits for the manufacture and use of alcohol and other intoxicating liquor for non-beverage purposes, and of supervising the activities of the permitees.  The 27 prohibition districts hitherto existing were rearranged into 12 new districts, with boundaries corresponding in some measure with the 10 judicial circuits.  (Misdirection! The districts were a nearly perfect fit to the Federal Reserve Districts–tr)

1. Boston: Maine, N. Hampshire, Vermont, Massachusetts, R. Island, Connecticut
2. New York: New York State and Porto Rico
3. Philadelphia: New Jersey; Pennsylvania, Delaware
4. Richmond: Maryland, Virginia, West Virginia, N. Carolina, South Carolina, DC.
5. New Orleans: Alabama, Georgia, Florida, Louisiana, Mississippi, Texas.
6. Cincinnati: Michigan, Ohio, Kentucky, Tennessee
7. Chicago: Illinois, Indiana, Wisconsin.
8. St. Paul: Minnesota, N. Dakota, S. Dakota, Iowa, Nebraska.
9. Kansas City: Arkansas, Kansas, Missouri, Oklahoma.
10. Denver: Arizona, Colorado, N. Mexico, Utah, Wyoming.
11. San Francisco: California, Nevada, Hawaii.
12. Seattle: Idaho, Montana, Oregon, Washington, Alaska.
Source: NY World Almanac 1931 p 36

That same day, the Bank of Winter Park, Florida, closed its doors. As prohibition asset-forfeiture confiscations continued, many other banks would close. The Liberal Party, formed in 1930, published a plank in 1931 calling for the repeal of blue laws and the Prohibition Amendment. The Democratic Party copied this plank in the summer of 1932–in the middle of a major banking panic–and went on to win the election in November. That is s demonstration of the law-changing clout of libertarian party spoiler votes. By the time Franklin D. Roosevelt was sworn in as president in March of 1933, every bank in the nation had already closed its doors.

If you are disappointed not to have learned this in school, join the crowd. But be sure to choose a financial and accounting translator who won’t overlook things and cause added disappointment.

Taxation as Looting

asset forfeiture

Chicago Tribune 01DEC1932

So the People’s Party got 9% of the vote in 1892, then the Democratic Party copied the Communist Manifesto income tax plank into their own platform. So… what came next, once the Progressive Party levered its passage?

Chapter 9

Manley Sullivan

            A Carolina bootlegger and car dealer named Manley Sullivan was convicted of income tax evasion, but appealed to the Fourth Circuit Court in 1926. Sullivan claimed that since bootlegging was illegal, filing tax returns for it would amount to self-incrimination prohibited by the Fifth Amendment. Sullivan won on appeal October 19 of 1926, but Assistant Attorney General Mabel Willebrandt appealed the Circuit Court’s decision, and the Supreme Court granted a hearing March 7, 1927.

The actual date on which attorney Manley Sullivan (or Manly Sullivan, records are inconsistent)  was originally charged, and in what location, is one of the most tightly-held secrets in American jurisprudence.  Federal Reserve bank balances (in millions) began falling nationwide when the decision freeing Sullivan under the 5th Amendment was struck down by the Supreme Court. Source, Lawrence, 1929. The nation’s economy at the time was roughly $100 billion in gold, and the Federal budget about $4 billion.

FRB reserves accelerated when the 5th Amendment was upheld in 1926, then began falling after the conviction was reinstated

The trial ended on May 16, 1927, reversing the appeals court decision and effectively nullifying the Fifth Amendment.[1] This time the dip in stock prices was much smaller. For one thing the discount rate had been carefully lowered since September of 1926, disguising somewhat any stock market effects.[2] On the heels of the Sullivan decision came the Marron case, in which the Supreme Court approved the use of a San Francisco speakeasy proprietor’s illegally seized books and records. Marron was also argued by Mabel Willebrandt and her victory eliminated what Fourth Amendment protection had survived the wartime Espionage Act.[3] Revenue agents were empowered to seize records and force confessions at will, eliminating the ditty of the times:

My sister sells snow to the snow-birds
My father makes bootlegger gin,
My mother sells love for a living,
My God! how the money rolls in.
My brother’s a big missionary
He saves little girlies from sin
He’ll save you a blonde for five dollars
My God! how the money rolls in.

 

[1] (U.S. v. Sullivan 5/16/27 274 U.S. 259)

[2] (Lawrence 1929 286-289)

[3] (Willebrandt 1929 241) (Marron v. United States 11/21/27 275 U.S. 192)