Introducing Professor Frederich List
Part Five of the British System
We will now address the subject of Dr. List's letters. The letters of Dr. List, and the economic theories he espoused in those letters, will become very significant to you when you see that his economic theories are being applied against you today by the Federal Reserve -- and are, thereby, controlling every aspect of your life.
Professor List represented the society of German merchants and manufacturers for the purpose of obtaining a German system of national economy. His plans of reform proving obnoxious to the government, he was accused of high treason and thrown in prison, and was subsequently exiled from Germany. He settled in Pennsylvania and studied and lectured on the doctrines of political economy. During his attention to that subject, he voluntarily addressed a series of letters which were published in the National Gazette. Professor List was also a member of the George Rapp Harmony Society. In his first letter he tells us what he means by the term "National Economy."Editor's Note: The author's negative opinion of List's economics is not shared by L. LaRouche, economist and an advocate of the original American System of economics. (Information on Lyndon Larouche can be found on his website at: Lyndon Larouche Presidential Campaign
"National Economy" teaches by what means a certain nation, in her particular situation, may direct and regulate the economy of individuals, and restrict the economy of mankind, either to prevent foreign restrictions and foreign powers within herself, . . .without restricting the economy of individuals and the economy of mankind more than the welfare of the people permits."
It is common knowledge that we have a "National Economy" today that directs and regulates the economy of individuals, and that of mankind -- and that this economy is controlled and regulated by the Federal Reserve System.
Swift v. Tyson, 16 Peters 1 (1842)
In 1842, in the case of Swift v. Tyson, the Supreme Court held that there was a general Federal common law (i.e., at that time, access to substantive common law existed at the federal level).
Limited Liability Act -- 1851
On March 3, 1851, the Congress of the United States enacted the Limited Liability Act, (codified at 46 USC 181-189), as amended in 1875, 1877, 1935, 1936, and the Act of 1884 cover the entire subject of limitations. The Purpose of this act was to limit the liability for the payment of debts of persons who were ship owners involved in maritime commerce. This act was the result of a US Supreme Court decision titled, "The New Jersey Steam Navigation Co. vs. the Merchants Bank, 6 Howard 42, (1848)." In the New Jersey Steam Nav. Case, the High Court ruled that under the Common Law, ship owners were liable for the acts of their ship masters. In other words, if a party were to ship goods on board a ship and something happened to the goods such as being destroyed or damaged by the perils of the sea, the ship owner was responsible to the owner of the goods.
The ship owner must pay to the owner of the goods the amount the goods were worth. If the ship owner didn't pay the debt, the owner of the goods could sue the ship owner and collect. If the ship owner failed to pay, the creditor could then file a lien on the ship which was called a maritime lien which does not require possession of the object. This Act specifically gives limited liability on shipments of "bills of any bank or public body." America was founded upon Maritime or Admiralty Law because shipping was the only means of commerce at the founding of the country.
The Congress decided in 1851 that, as a result of the New Jersey Steam Nav. Case, persons would no longer be drawn into ownership of ships because of the liability involved. Shipping on the high seas is very risky especially at that period of time.
After the Limited Liability Act was enacted , the US Supreme Court in Butler vs. Boston & Savannah Steamship Co., 130 US 527, ruled as follows; "But it is enough to say that the rule of limited responsibility is now our maritime rule. It is the rule by which through the Act of Congress we have announced that we propose to administer justice in maritime cases."
"The rule of limited liability prescribed by the Act of 1851 is nothing more than the old maritime rule administered in courts of admiralty in all countries except England from time immemorial and if this were not so, the subject matter itself is one that belongs to the department of Maritime Law."
Tontine Insurance -- 1868
In order to evade the usury laws which had prevented the growth of a funded system of national insurance, governments had frequently resorted to the issue of annuities and child endowments as a means of raising funds. The tontine was a somewhat later development, having been put into operation in France during the year 1689. It took its name from that of its originator, Lorenzo Tonti, a Neopolitan by birth, who was attracted to Paris by the regime of Mazarin. In its original form the tontine was a loan, "In which the premium was never to be repaid, but the entire interest on the loan was to be divided each year among the survivors or the original subscribers."
The chief characteristic, and trademark, of tontine is that the pool of assets is divided among the survivors, at the options of those subscribers who dropped out, or did not survive until the time for distribution had arrived. It was a wagering policy, just like that of the George Rapp Society. The Equitable Life Insurance Company, in 1868, introduced the deferred dividend system, which was really an application of the tontine principle. The most serious flaw in the deferred dividend system was the inability of the insured to compel an accounting. The general rule is that the policy holder is not entitled to compel the company to account for dividends. Nor can the policyholder "compel the distribution of the surplus fund in other manner or at any time, or in any other amounts than that provided for in the contract."
As stated in the report of the Armstrong Committee, "the plan of deferring dividends for long periods. . . has undoubtedly facilitated large accumulations, providing apparently abundant means for doubtful uses on the one hand, while concealing on the other the burden imposed upon the policy holders. . ." According to George L. Armhein, Instructor in Insurance at the University of Pennsylvania, ". . . deferred dividends were prohibited by law in the legislation (Pa.) of 1906 and subsequent years. Thus came to an end a system which in 1898 had superseded to a very large extent that of annual dividends, and which in 1915 seemed antiquated."
Question: What made it "antiquated" in 1915? According to Mr. Armhein, it was outlawed in 1906, but didn't seem antiquated until 1915! John K. Tarbox, The commissioner of Insurance the State of Massachusetts had this to say about tontine in his annual report: "The false idea of life insurance as investment begat the equally false conception of life insurance as a bet, and the latter gave birth to the modern tontine, which is a wager."
". . .In the tontine the forfeitures go to enrich the individual survivors of the special class of policy holders who enter the compact, constituting a company liability instead of a company asset, for the protection of its policy obligations. . . The stake played for, rather than the game itself, constitutes the chief offense. Our law condemns, forbids, and makes void the contract of forfeiture." "As was truly testified before the committee of the New York Assembly, in 1877, . . . the tontine policy is taken for purposes of investment by a set of men who would not insure their lives at all. The inducement to the investment is. . .the expected profits from forfeitures. . ."
"Aside from the moral quality of the matter, -- concerning which I waive controversy, -- the considerations which the public aspect seems to me principally to invite are these; First, whether it is prudent to make of our insurance companies great banking establishments, . . .and, second, whether an institution organized as the life insurance system was, for a benevolent and unselfish use, shall be combined with enterprises of selfish speculation as the tontine undeniably is." I am strongly persuaded of the implicitly and positive danger of magnifying the banking feature of life insurance institutions, to accommodate modern plans of tontine speculation and endowment investment.
John Tarbox was clearly saying that, at that time, there were modern plans to make insurance companies (specifically, tontine insurance companies) great banking institutions.
The tontine had been declared unlawful in several states and these people knew that they had to do something to protect their money. They brought over the son of one of the big banking families from Europe, Paul Warburg, from the House of Warburg, which dates back to the Hanseatic League of merchants. cmlaw5.htm
Back to PART ONE TWO THREE FOUR
Proceed To PART SIX