Chapter VI
THE TWO ECONOMIES

America will spend itself into national ruin.
— Lenin

We have seen from our examination of the structure of the tax system in the United States that it was designed to exempt the privileged few from the obligation of supporting the profligate government.  There is yet another aspect to the sordid betrayal of America by the political opportunists in Washington.  Few people realize that another group of tax exempt or tax favored institutions exist within the business community.  What is true for individuals is also true for business enterprise.  We have two classes of corporate citizens :  the tax favored and the taxed.  The tax favored or tax exempt institutions have been woven into our economic fabric so cleverly that few people are able to identify them or distinguish them from ordinary businesses.  These organizations not only receive tax favored status but also special legislative treatment.  Millions of Americans are probably unaware of the economic impact these institutions have on the individual taxpayer or corporate business enterprise.  Millions of Americans are also probably unaware of what these institutions are or how to recognize them.

Probably one of the most familiar of these tax-favored entities are the cooperatives.  Just what are the cooperatives and how does one identify them ?  Here is a list of these legislative favorites :  that part of our economy which is free from the regulations, burdens and tax discrimination of the ordinary business community, the unfree business sector.

1.  Labor and agriculture cooperatives
2.  Mutual insurance companies
3.  Credit unions
4.  Utility cooperatives
5.  Savings and loan associations
6.  Mutual investment companies
7.  Miscellaneous cooperative organizations (benevolent, fraternal, not for profit, beneficial, etc.)^[1]

Since most people are so familiar with these institutions, very little unfavorable reaction may be felt until one begins to dig beneath the surface.  When thousands of quasi business enterprises are given special consideration, it means that the tax burden must be shouldered by the other segment of the business community, e.g., the private enterprise sector.  The presence of this privileged class has the same effect on the tax rate of corporations as the presence of tax-free individuals has to the private citizen.  It simply increases his tax burden to cover those not paid by the untaxed privileged ones.  One might say that two economies exist within the United States, free enterprise and cooperation (Socialism).  Since the word cooperation or cooperative has become so much a part of our economic vocabulary, most Americans probably regard these institutions as a legitimate and desirable part of our national economic structure.  It is even doubtful if more than a small fraction of the people employed in or associated with these organizations have any idea of their subversive nature.  The ultimate purpose of the cooperative movement is to destroy private property and the profit system (free enterprise) and substitute a planned economy which will be ruled by the elite of the cooperative movement.

The cooperative movement had its origins in England.  The headquarters of the cooperative movement is in London where the International Cooperative Alliance is located.  It is estimated that there are cooperatives functioning in about 59 nations and that their members number over 200 million people.  There are some 25 million cooperators in the United States alone, including thousands of college students, who are being trained and indoctrinated with the ideas of cooperative Socialism.  The International Cooperative Training Center is located at the University of Wisconsin in Madison.  It is here that future labor leaders are trained and funneled out into the various organizations and countries, including international labor movements and other areas where they will be able to utilize their training in a supervisory or administrative capacity.

The ultimate aim and teachings of cooperation is to establish a world federation.  Prior to the 1930s they used the hammer and sickle as their symbol but they then adopted the multi-colored rainbow flag which cooperators fly on July 1, International Cooperation Day.  Socialism has been called cooperation on a grand scale, and Communism is sometimes referred to as Socialism in working clothes.  According to present plans, the United Nations World Government will be superceded by International Cooperation when the world will be divided up into administrative regions and governed by the self-selected few.^[2]

"It is a principle ... and a dominant aim ... of the International Cooperative Alliance, a world organization, to transform the capitalist profit-seeking system into a cooperative social order, in other words, into a Socialist order of society.  This is the aim of every Communist worker.  But the means which we propose differ from those which the cooperators of other political creeds advocate as the correct ones.  We believe that if this aim, the elimination of the capitalist profit-seeking economy, which is the aim of the International Cooperative Alliance is to be achieved, we must be quite clear that it can only be realized if the whole working-class movement does away with those who, as the factors of power of the bourgeoisie in every part of the world, continually threaten the workers.  This we cannot achieve by traveling along the smooth road of evolutionary development, but we must wring it from the possessing classes by fighting against them."

____________________________

"The Cooperative League of the United States is the national organization which connects the cooperative societies of this country with the International Cooperative Alliance.  Strengthening the societies of the United States means strengthening the International Alliance.  The foundation that is building in this country is more than national;  it is part of a world structure." (C.L. 1930, p. 3)

"The Cooperative League of America not only affirmed in its last congress that the cooperative movement is primarily a labor movement, but has started a campaign against the income tax law." 12th, 121, 1927.

"Co-operation is a labor movement fundamentally." (Consumers Co-operation p. 208)

"Under universal cooperation society as a whole would dominate, and all the labor groups would be subservient to it" (Consumers’ Cooperation p. 214)^[3]

Although cooperatives have been in existence in the United States for over 60 years, it wasn’t until the advent of the multiple-termed President Franklin Roosevelt that the co operative movement was given the legislative thrust which established it on a grand scale.  Social and economic experimentation was launched in almost every sphere of human activity in an attempt on the part of government to alter, change and regulate the lives, thinking habits and property of the citizens.  The statists were now in control and their plans of conquest were launched.  Despite the fact that government control (Socialism) has existed for thousands of years and has produced only starvation and stagnation, the statists were prepared to resurrect the corpse.  Ancient Egypt, China and other early civilizations had suffered under the yoke of what might be termed Communism (total government control) and the effects were always famine, misery and reversion to the agrarian economy.

During the Industrial Revolution a degree of economic emancipation occurred, and in two centuries the world saw such progress as had not been achieved in the previous 6,000 years.  This progress was largely due to the inovativeness of scientists, thinkers and plain people who applied common sense to the problems they met in their daily life.  In the American Colonies the early settlers arrived with little more than sheer courage, but they forged cities, industry and prosperity undreamed of in Europe or elsewhere, where the heavy hand of the state was ever present.  In other countries it may be truly said that progress occurred in spite of government and allied hierarchies, as in earlier centuries, disagreement with the king could mean a man’s life.  The king was always on the side of reaction.  Now these reactionaries were fully in control and they began to shatter the greatest experiment of mankind, economic freedom, into the ancient shackles of repression, regulation, and the archaic control of man and his total environment by the rulers.  But the statists want undisputed power, and they will continue to strengthen their arrogant rule over the lives of millions until either our economic achievements have been dissipated or people rise up in rage and refuse to obey these parasitic dictators.

An example of early cooperative legislation will be found in the establishment of the Farm Credit Administration.  Under this act, dated June 16, 1933, C98 (Paragraphs 2, 3, 40, 48, St. at L., pp. 257, 264, 265) the governor of the Farm Credit Administration was authorized to establish banks for cooperatives in each city where a Federal Land Bank was located.  These banks were authorized to make loans to cooperative associations.  The central bank for all the cooperatives was located in Washington, D.C.  This bank was permitted to make loans to cooperatives and also to banks for cooperatives.

The Roosevelt years of centralizing legislation would never have been possible without the planned, prolonged depression which continued for years after the stock market crash in 1929.  Government was held up to the people as being its benefactor.  Didn’t government create work projects ?  Didn’t government see that the unions became so strong that labor could now get higher and higher wages by engaging in crippling strikes and boycotts ?  Whenever mankind needed comfort, aid and money, government was there to give it, or so it was pictured to the people.  What government officials did not tell the public was that the entire economic collapse had been planned so that the despair of the nation could be repaired by a seemingly kind and beneficent government in order to gain more power and control.  Also, we were not told that had we been given our constitutional and honest money system in 1930 immediately after the crash, our economic troubles could have been over within three to six months.  With an honest money system, government could have spent money into circulation rather than borrowing it from the private Federal Reserve monopoly.  Money would have been available for industry;  expansion would have occurred, and jobs would have been plentiful instead of scarce.  Prosperity would have replaced depression.  But the planners could never have tolerated this turn of events, for without misery and depression, they could not have woven the skeins of government tyranny around the throats of the American people.

During the era of Franklin D. Roosevelt, the cooperative movement was given every possible aid by Washington.  It was during these years that the nation was being pushed into the orbit of total government control and legislation was being rushed through with lightning rapidity, establishing the basic framework for this privileged sector in the business community.  It must not be forgotten, however, that due to the well planned depression that began with the stock market crash in 1929, the Hoover administration jumped immediately into the act of attempting to restore the country to "normal."  Most of the plans presented and enacted revolved around a now familiar theme—creation of multiple bureaus and agencies under central direction funded with tax or borrowed money.  In 1929 the Agricultural Marketing Act had been passed which established the Federal Farm Board.  This agency was empowered to make loans to cooperatives at low interest rates.  Public works projects were inaugurated and the Reconstruction Finance Corporation was established.  They loaned money to businesses which could not get conventional loans, and later the act was extended to include loans to agriculture, cities and even states for public works.

John Maynard Keynes, who advocated all-out government intervention in economic matters, became the economic cultism which have given grasping bureaucrats an excuse for economic plunder under the lofty title of central planning.

Unemployment Figures
1930 ............ 4,340,000 1938 ......... 10,390,000
1931 ............ 8,020,000 1940 .......... 8,120,000
1932 ........... 12,060,000 1945 .......... 1,040,000^[4]

World War II came to the rescue in 1939.  A flood of war orders inundated industry.  Soon millions of men were in the armed services and anyone employable was able to work.  But a war does not solve an economic dilemma.  The powers which stage-managed the whole era had simply moved their world into a new dimension of horror and exploitation.

It is possible that some of the Congressmen and Senators during the 1930s were unaware of the sinister power exercised by the money pool.  There were several courageous people who did attempt to inform them—but no one would listen.  Congressman McFadden was knowledgeable on the matter of our money problems and he continually attempted to alert Washington to the presence of alien and sinister forces within our nation.  In 1934 Congressman Louis T. McFadden (Pa.) was able to insert into the Congressional Record of May 3, 1934 remarks in which he warned of the similarity between the Fabian Socialist plans operating at that time in England under the political economic organization known as "Freedom and Planning" with the N.R.A. and other "brain trust" type schemes within the United States.  He also noted that "this association (the Foreign Political Association) was largely organized and fostered by Felix Frankfurter and the late Paul N. Warburg."  In his book Conquest or Consent, W.V. Vennard quotes author Annie Riley Hale as saying, "There never has been such a thing as free enterprise or industry since the establishment of our crooked, haywire banking system, nor will there be so long as this system is sanctioned."^[5]

Another phenomenon originating in the 1930s was the virtual abandonment by Congress of its role as an initiating lawmaking body.  Instead it became a fawning rubber stamp to the legislative experiments which made their way in increasing frequency from the Presidential desk.  Congress began to abdicate its role and the courts began to reinterpret law in accordance with the Socialist doctrines of the Fabians, who had by now firmly established their control in almost every facet of government.  Americans were treated to a steady stream of "let government do it" propaganda until the average person developed the attitude that only the planners could solve problems.  Mountains of literature and newsprint were devoted to the wonders of government intervention, and the utter failure of the free market.  It was never even imagined that there could even be a counter argument to the harangue of pro-government propaganda.  In fact, any counter arguments were eventually forgotten and people tacitly accepted the notion that when elected, a political puppet donned the mantle of omniscience and became qualified to reshape our destinies.  Even businessmen became infected with this doctrinal malaise.  Along with the abdication of individualism, Americans soon became the greedy seeker of government booty.  Good father government gave his children according to their needs (demands)—there were public works projects, war industries with adequate overtime pay, social security, insured savings, and a mountain of "goodies" which were represented as being divinely due to each and every person simply by virtue of his existence.  The good dispenser of these bounties was the government in which the president became personified by the father-king concept.  Father king would allow no harm to come to his nation.  Everyone was affluent, everyone was provided for and everyone continually wanted more of these "free" privileges.  Soon the once individualistic American begged and shouted his complaints about the failure of the political button pushers to achieve the millenium.  More voices were raised "demanding" more security, money;  more of everything that government was able to dispense.  People did not bother to consider that to achieve almost full employment, it was necessary to raise an armed force of over twelve million men.  Few also bothered to analyze that with the World War II years busy producing materials of destruction, the transition phase into civilian goods would reach a relatively untapped market.  There was such a long, buildup demand that this abnormal situation was regarded as prosperity.  And again government was given the credit.  Few also bothered to worry about taxes.  They were high, true, but look at all the benefits beneficient government had given us.  It was only later that a few people realized that World War II had been planned—that the very people sitting in Washington had been advised by military intelligence that the Japanese code had been broken prior to Pearl Harbor advising of the imminence of attack.  This same government which was so busy giving us prosperity did it via the path of economic depression, war, the dismantling of our constitutional republic and the debauching of our currency.  Now, many people doubt that huge federal expenditures and skyrocketing taxes really represent prosperity, but the mold has been set and it is difficult to turn the tide around to prevent the avalanche of economic chaos which many believe is near.

Despite the warnings of the few, the king’s men in Washington wasted no time in riveting their control on an unsuspecting nation—all in the name of benevolence.

During this period "the other economy" was nurtured and strengthened by the free-loaders in Washington.  They no longer bothered to legislate.  They merely pushed buttons and enacted any and all weirdo legislation requested by the Socialist banker-accommodating Franklin D. Roosevelt and his successors.

Before we proceed to examine the two economies, we should do what the liberal sloganeers never do—define terms.

"The words `cooperative company or association’ mean a company, corporation or association which authorizes the distribution of its earnings in part, or wholly, on the basis of or in proportion to, the amount of property bought or sold to members or members and to other customers, or of labor performed or other services rendered to the corporation."^[6]  "A beneficial association is an organization, whether voluntary or incorporated, which has been formed primarily for the protection or relief of its members or their dependents and not for profit."^[7]

One of the most prominent features of the cooperative setup is the conspicuous tax advantages they enjoy.  Many are totally tax exempt.  Due to this loss in tax revenue, it has been estimated that the tax loss is now some $50 billion per year.  These deficits are then made up by extra levies on the hard-pressed legitimate business enterprise and the middle and working classes.  This unprivileged group is all that is left to carry on the burden of the elite, tax-free individual, foundation or favored cooperative business enterprise.  Mutual fire and casualty insurance companies were at one time tax exempt, but due to considerable opposition they are now taxed, but at a fairly low rate.  Savings and loan associations were also similarly tax exempt but due to mounting political pressure, they are now also required to contribute their pittance for appearances sake.  There are over 41,000 cooperative organizations in the United States which do not pay any income tax at all.  We must begin to recognize the existence of these institutions, study their effects on the economy and demand that the Socialist "corporate" structure be removed.

These "not for profit" institutions were usually formed under the statutory authority of Congress or individual states and the articles of the association usually defined the liabilities of the members.  We must note the emphasis on the negative aspect not for profit.  This reflects the high disdain the Fabians have for a profitable enterprise, provided that it is not within the realm of the favored cooperative setup.  "Not for profit" does not mean that tax favored enterprises do not make profit.  They are often very profitable.  The "not for profit" symbol in a corporate setup usually indicates a tax free or tax favored institution which owes its special privilege to the "not for profit" tax advantages it enjoys.  This is again one of the hallmarks of the two economies, the privileged sector which exists as a result of the ability of the free enterprise segment to absorb the ever increasing taxes, costs of doing business, borrowing money, discriminatory taxes, research and development costs, high labor costs, etc.  Despite the handicaps under which the non-privileged sector has been working, it might be said that they are virtually carrying the burden for the entire nation.  It has been from this sector that the phenomenal progress of the last several decades has emerged.  It has been from the taxed (unfree enterprise) segment of American business that we have seen the first venture into space become a reality.  Through the taxed segment of our business enterprise has come the phenomenal developments in chemicals, packaging, miracle fibers, transistors, computers and dozens of other innovations continually emerging from the corporate spectrum.  Despite their privileges and exemptions, little of any value has been contributed by the cooperative segment to the American business community.  The research and development in the American business community has been the phenomenon of the millennium.  The inventive genius of mankind is ever alert to find new avenues in which to channel the mysteries of science into giving us an ever increasing array of new products and ideas.  It has been estimated that within the next decade the way-out luxuries of today will become commonplace necessities for the average family.  A two-car home is now considered almost mandatory for millions of Americans.  Modern homes with swimming pools dot the suburban landscape—and the newest fad, the second home, may be reality within fifteen years for millions more.  But with all the innovations of free enterprise, the statists are determined to saddle the world with their antiquated theories of government and economics.  Their moves have been steadily in the direction of more centralized control—the destruction of individual rights and freedom, and a controlled economy—by them, naturally.  This direction has been firmly established and followed for over forty years—with lawmakers grinding out the Socialist legislative package, often without even bothering to pay much attention to the content, nor its effect on our nation.

The statists cannot understand the operations of that part of our economy which represents the free market.  Even with its manifold controls, it is the envy of the world.  While the hippie and anti-social type continually rant about a reversal into agrarian bliss, loud howls are engineered through the United Nations to give the "underdeveloped nations" the bounties of industrialization and progress.  Although our system is decried by the totalitarian socialists, they seem only interested in the fruits of our economy without being willing to practice the disciplines necessary to produce progress in their own nations.  Unless the free market is allowed to operate, and correct its own errors, we will see the world slide down into the scarcity and poverty so characteristic of a managed economy (Socialism).  The king and his court have never concerned themselves with the welfare of the citizens.  Even in 1795 James Madison noted this when he commented on "the old trick of turning every contingency into a resource for accumulating force in the government."  An economy is only free if it is permitted to operate without interference.  It is a self-correcting phenomenon.  If overproduction develops, a voluntary contraction will occur.  The producers will gear their output to the needs, changing whims and demands of the consumer.  In this kind of an economic relationship, the consumer is king.  It is he who is catered to, courted with advertising, and for whom companies continually update their products to woo his buying.  If the customer likes the product, he buys it.  The more he purchases, the lower the price goes.  If the product is unsuccessful, it will be withdrawn from the market or improved because of consumer rejection.  A company which cannot meet competition fails.  This is the law of the marketplace.  The failures should not be subsidized.  This is a direct contrast to the methods employed by the state monopolists who continually parade higher and higher costs of doing business—despite their legal freedoms, tax free or tax-favored status, low interest rates on borrowing, etc.  Anyone who has ridden the public transportation system in Chicago, which is operated by a city corporation, knows what high costs mean.  The fares have risen from seven cents in the 1930s to fifty cents, with still more increases promised.  Compare the costs of a long distance phone call from Chicago to New York :

1940 $1.90 first three minutes plus 60¢ each additional minute
1950 $1.55 first three minutes plus 40¢ each additional minute
1960 $1.45 first three minutes plus 40¢ each additional minute
1970 $1.30 first three minutes plus 35c each additional minute
(Station-to-station during business hours)^[8]

The post office is another example of government bungling in its monopoly over the mail.  Costs continue to go up as service continues to deteriorate.  Between 1930 and 1970 the cost of sending a first class letter within the United States has risen by 300 per cent, with still more increases promised.  Every time government meddles in the operations of a free economy and prevents normal corrections, more regulations pile up.  As the regulations pile up, disastrous effects occur and more dislocations mount.  Eventually the whole system is in a muddle and the bureaucrats blame business or free enterprise, instead of their own meddling.

There is no one individual or group of planners who are smart enough to anticipate the needs, buying, change of plans, success or failure of items, etc. in any nation on earth.  Those familiar with the stock market will no doubt be familiar with the Dow Jones Industrial Averages.  The Dow Theory believes that the market is able to anticipate and discount economic changes before they occur—that the industrial averages are a barometer of all the factors that affect our economy in any way and the various reasons (or lack of them) as to why people buy or sell stocks.  However, the Dow Jones Industrials are a composite average of thirty of the nation’s leading industrial companies which represent over 35 per cent of the value of all the stocks represented on the New York Stock Exchange.  And the average itself is the result of the free action on the part of investors, insurance companies, funds, etc. who determine by their purchases or sales what their feelings are regarding the state of the market.  To equate this type of action with a committee of political "yes-men" is absurd.  For too many years this system of privileged enterprise has been functioning within the framework of our economy, not only enjoying tax benefits, but legislative favoritism "having been encouraged by both state and federal law."^[9]  It is time this monopoly is ended.

A Division of Cooperative Marketing has even been established by Congress "to render services to cooperative associations."^[10]  These associations are virtually immune from anti-trust laws and are favored by privileges and immunities in comparison to the other forms of business enterprises."^[11]

Cooperatives are defined as cooperative or mutual organizations where the same persons are both owners and customers.

One of the primary sources of revenue for these associations is from members dues and levies.  Unfortunately, many members of these associations are unaware of their contractual liability and general disadvantages of being involved in a cooperative setup.^[18]

A building and loan association "is an organization created for the purpose of accumulating a fund by subscriptions and savings of its members to assist them in building or purchasing for themselves dwellings or real estate by the loan to them of the requisite money."^[19]  A building and loan association must be a mutual association, formed for the purpose of loaning money for home building.^[20]  Remember, officers and directors in stock companies are liable to the stockholders for their actions.  In building and loan associations and other mutual organizations, the officers and directors are usually regarded as agents of the association and therefore are not liable to the shareholder members.

Few people realize that when they engage in business activities with a savings and loan association they fall into one of two categories.  Those who borrow (take out a mortgage) become stockholders.^[21]  Those who deposit money are regarded as contributing to the capital stock of the association.  When the mortgagee (borrower) has liquidated his loan he is regarded as having paid for his shares in full.  His membership in the association then ceases.  But as long as he owes money he retains his membership in the association.^[22]  During the period of membership "he is bound by its by-laws and is deemed to have notice of them upon becoming a member of the association."^[23]  His relationship to the association is that of debtor, stockholder and member.  In his capacity of debtor, his "duties are to pay premiums, interest and dues."^[24]  And "in his relationship as a member, he is obliged to contribute to the losses and expenses of the common enterprise."^[25]  If people are unaware of these facts, it is not entirely their fault.  They simply have not been told.  In fact, every effort has been made to conceal these realities from the American public.

Savings and loan associations are different from commercial banks in several respects.  Mutual cooperative organizations (savings and loan associations) are not permitted to engage in general banking activities.  They may not deal in the capacity of trust company or trustee, issue bonds or deal generally in real estate.  However, there are areas in which they have special legally-granted privileges and one of these is found in the realm of usury.  "Generally contracts in building and loan associations are not regarded as usurious even when the payments by the borrower exceed the lawful interest on the loan."^[26]  In some states special statutes have been enacted exempting savings and loan associations from usury statutes and the constitutionality of these statutes has been upheld.^[27]  The money which these associations collect from members falls into such categories as dues, fines, premiums and other assessments.  Mutual savings and loan associations were totally tax exempt until 1951.  They are now taxed, but even in 1970 their tax rate is relatively low in comparison to commercial banks.

These building and loan associations were originally sold to the legislative community by using the idealistic argument that members could contribute money to the organization which they might later withdraw in the form of a loan to enable them to build a house.  While this argument may sound convincing on the surface, the true nature and purpose of the institution was well concealed.  Under a rational interpretation of the idea of due process of law, all persons, whether natural or corporate, must be accorded equal treatment before the law.  But as in all Socialistic ventures, competition on an equal footing is unthinkable.  The very nature of the state-monopoly cartel is one of special advantage, privilege and unique power in every realm of its endeavor.  When one realizes the impact on our economy of this privileged sector which earns billions of tax-free dollars, we might pause to consider the robust nature of the other sector, which has still been able to compete, even with the odds stacked against it.  However, this ability is decreasing with the passage of each new monopolistic measure and we may anticipate the time when the private sector will not be able to withstand further discrimination.  The free enterprise sector must operate at a profit.  This is essential for its survival as it must depend on sufficient earnings to pay for all its operational costs, wages;  research and development, cost of borrowing and taxes, etc.  The statists intend to collapse the free sector, and then their control will be total.  This is what Socialism is all about.  And when this occurs, we will live in a rationed economy of scarcity.  But the statists will then have total control and our very survival will depend on their approving good will prior to the issuance of our ration cards for food, housing and all necessities.

Mutual insurance companies are defined as "a cooperative enterprise."^[28]  As in other cooperative enterprises, there are differences in the relationship between policy-holders of a capital stock insurance company and a mutual insurance company.

These mutual insurance companies which operate side by side with capital stock companies are hardly identifiable by the American public.  It may be that millions of individuals have been sold policies in these companies without either the salesman or the purchaser being aware of the implications of the contractual obligation which is being assumed.  For a company to issue a policy without full disclosure of the contractual liability might be considered deceptive, at the least, and fraud at the most.  These mutual companies represent all forms of insurance coverage including life, casualty, automobile;  health and accident, etc.  In order to determine whether or not you own a policy in a mutual insurance company you may find the clue in the title.  Often a company includes the term mutual in the name.  However, this is not always the case, and the policy-holder may then glance through his policy and find an announcement of the annual meeting of stockholders to which he will be invited.  This announcement will be found in the policy itself.  The annual meeting will be held on the date and place indicated in the policy, and no other notice need be given.  There is yet another facet to the problem of cooperative insurance coverage.  In the case of a mutual automobile policy, the coverage may be recognized in several, but not all states.  Thus a policyholder with a mutual automobile insurance company from the state of New York might find that after he collides with a car in Michigan, his coverage may not pertain.  These are factors which should be checked out prior to the time of purchase.  Be certain that the company does business in all states.

Consider the purchase of an insurance policy in a mutual company.  Should one of these companies suffer severe losses in any year, the liability can be spread around among all the stock-holders (policy-holders) and management will thereby reduce its share of liability.

Mutual and cooperative insurance companies have always had many friends in Congress.  Among some well-known Washington figures who are, or have been mentioned as cooperators, are Senator John Sparkman and the alleged fighter of the Federal Reserve System, Congressman Wright Pattman.

In order to originally sell the idea of these privileged institutions to the unimaginative and half-witted legislators, they were presented with the usual halo of shining purity and idealism as "an insurance company which provides insurance to its members substantially at cost, and whose members are common, equitable owners of the company’s assets."^[30]  When these privileged organizations were originally legislated into existence, it was never assumed that they would compete equally with stock companies.  A capital stock company receives no tax consideration, but the cooperative insurance companies may deduct from their income "patronage dividends" which are amounts distributed out of earnings to patrons (members).  To carry the tax advantage even further, certain smaller mutual insurance companies are totally exempt from taxation if their income does not exceed a certain established rate.^[31]

To the novice in the stock market who feels that he would prefer to let the professionals manage his money, he turns instinctively to mutual funds.  So good a sales job has been done by these funds that few investors in the category of fund purchasers even realize that they are stepping into the realm of Socialist-monopolist venture with the facade of free enterprise as a front.

Mutual funds are called regulated investment companies by the Internal Revenue Service Code.  This definition is of little help as all funds which come under the jurisdiction of the Securities and Exchange Commission are subject to their scrutiny.  However, there are differences between the mutual funds and the closed end investment companies.  A mutual fund is never listed on the New York Stock Exchange or any other stock exchange, while the closed end investment companies have their stock traded on the open market as any other listed corporation.  Their shares are for sale to the public, and the management invests proceeds from the sale of stock and income from investments to strengthen the financial position of the company and also the trading value of their stock.  There are a fixed number of shares outstanding, whereas in a mutual fund, the number of shares expands with additional sales.  This could produce a disproportionate idea of the value of their stock except for the fact that there is a relatively high redemption rate, which has a tendency to somewhat stabilize the price of the stock.

One of the tax advantages enjoyed by the mutual investment funds is their privilege to elect to be taxed only on the income which they do not distribute to their shareholders.  This means that when they declare a dividend on earnings, this distribution to the shareholders exempts the total amount from taxation.  Often these dividends are never distributed in cash, but merely credited to the account of the stockholder.  This gives the mutual fund manager more money to use for further investments.  The closed end investment company may declare dividends but only after the corporate taxes have been paid on the earnings which occurred before the dividends were declared, and after provision for taxes has been made.  This elective ability on the part of the mutual funds is a distinct and unfair advantage over other investment funds.  It is another example of arbitrary and unfair intrusion by the government in the economic affairs of its citizens which produces discriminatory advantages for one corporate citizen as against the other.

Why do we allow this unfair and discriminatory situation to exist ?  Perhaps the best answer comes in analyzing the nature of government itself.  Government never has, and never will, exist for the benefit of the citizens it rules.  It exists for the power, privilege and plunder it may extract from those who produce the wealth and prosperity which the rulers exploit.  Government is an archaic, unwieldy and absurd institution, and the more powerful it becomes, the more infinitely ludicrous are its antics.  In the end, if allowed to expand to totality, the individual, progress and all freedom will be ended.

A good example of the absurdity of government can be found in the following illustration.  When the United Nations Treaty was adopted by the United States Senate, only two senators had bothered to read it.  This treaty was of such vital importance that it surrendered the sovereignty of the United States and transferred it to the United Nations Organization.  We now were reduced to the level of member state who would follow the dictates of hostile alien nations operating through the United Nations front.  These enemy parasites are now in the position to legislate measures affecting the lives, economy and security of all American citizens.  Yet only two senators were aware of this fact.  And only a few are aware of it now—in this year of our Lord, 1970.  Another example of monumental betrayal by our Washington representatives came with the signing of Public Law 87-297 in 1962.  This law turned our armed forces over to the United Nations and was vigorously supported by our president John F. Kennedy.  Did they know ?  Did they care ?  Was it legal ?  Regardless of the obvious answer to these questions, the government continued in its ruthless thrust to dismantle the nation so that the money pool which runs the world would allow them to retain their position of privilege, power and plunder.  We might say that this same attitude prevails on virtually every issue which comes before these bumbling oafs.  Even if one could find a representative with integrity who wanted to vote intelligently, the sheer weight of the legislative volume would render this an impossibility.  So we have thousands of laws passed without anyone really knowing what is going on.  These laws are prepared in committee and are usually voted on with a partisan bias.

Now visualize a corporate giant such as General Motors which has a farflung economic empire, but which is administered without the force and fraud used by government.  Suppose a rival company desired to absorb General Motors into its corporate spectrum.  Would an agreement to liquidate General Motors be passed by the Board of Directors with only two of the officers having read it or having been aware of the nature of the agreement ?  The answer is obvious.  Every aspect of corporate negotiations are viewed in detail, and the welfare of the company is always important to those who must make a good showing before the stockholders.  What would happen to the Board of Directors of General Motors if they signed an agreement transferring the company to a rival foreign automotive concern without even any remuneration being given for the sale of its entire assets and without anyone being aware of what had been done.  How would the stockholders feel if they read in the Monday morning Wall Street Journal that this agreement meant that their individual shares could now be converted into a stock selling at $3.00 per share, while the closing price for General Motors stock the previous Friday had been around $75.  Of one thing you may be certain—there would be stockholders suits and many legal and economic repercussions which would dismay even the stoutest of corporate officials.  But in private business this would never happen.  This only happens in government.  And as in the case of the United Nations Treaty, the nation was given away and its assets pledged to foreign manipulators, with only two senators bothering to know or care what was happening.  Can we invoke a citizen’s or taxpayers suit against these scoundrels ?  How can we tolerate such a situation to continue, year after year, decade after decade ?  The political manipulators have made their intentions clear by the legislative conduct over the past 35 or more years.  They mean to enslave our nation and usurp every asset, including the people to force 200 million people to accept their political and economic philosophy-at gunpoint if necessary.  This is government at its best.  Total government represents the best, from its standpoint.  How do you, as a citizen, feel about its effectiveness ?  Shall we reverse the trend and demand our individual rights and freedom ?  Shall we declare ourselves to be the sole proprietors of our lives and property—to decide for ourselves how we will live and be free from the tyranny of those who live by ruling others.  Let us permit the wonderful world of freedom and free enterprise to become a reality.  This would enable our nation to enter an era of unprecedented prosperity which would be the greatest war against poverty and slavery that has ever been known in the history of mankind.

1. CARE (Cooperative American Remittance) is an example of a cooperative which would be classified under the miscellaneous category.

2. Lest anyone think that cooperation isn’t Socialism, V. Lenin noted as early as 1923 that "cooperation was a part of the worldwide Communist movement."

3. Reprinted with permission of Mr. Austin T. Flett, 34 S. LaSalle Street, Chicago, Illinois 60603.

4. U.S. Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1957 (Washington, D.C., 1960).

5. Wickliffe V. Vennard, Conquest or Consent (Boston, Massachusetts: Forum Publishing Company, 1965), p. 85.

6. Corpus Juris Secundun Volume 78 (Brooklyn, New York: American Law Book Company, 1939). Case cited: Chaffee vs. Farmers Co-operative Elevator Company, 168 NW 616, 617.

7. Ibid., Volume 9, Paragraph 958.

8. Statistics courtesy of Illinois Bell Telephone Company.

9. Dark Tobacco Growers Co-op Association vs. Robertson, 150 NE 106.

10. 7 USC, Paragraph 452.

11. Saylesville Cheese Mfg. Company vs. Zimmerman, 265 NW 856, app. dismd. 299 US 504;  81 L. ed. 374;  57 S. Ct. 18.

12. Agnes vs. Macomb Building and Loan Association, 64 NE 260.

13. Burke vs. Cooperative Finance Co., 62 Wash 2nd 740, 384 P2d 618.

14. A cooperative association may levy an assessment on members to obtain working capital as well as to meet existing indebtedness. Lockport Co-op Dairy Association vs. Buchner, 155 NE 907: Annotation: 77 ALR 421, s. 98 ALR 1421.

15. U.S. vs. Elm Spring Farms (DC Mass.) 38 F Supp 508. Contracts between cooperative associations and their members may be afforded a protection in the law denied to the contract;  of all other persons, natural or corporate. Liberty Warehouse vs. Burley Tobacco Growers Co-op, Marketing Association. 276 US 71, 72 L. Ed. 473, 488 S. Ct. 291.

16. Farmers Co-op Company vs. Birmingham. 86 F. Supp. 201.

17. Sullivan vs. Spaniel, 78 Ill. 125. 127

18. Members of a building and loan association may be liable on a pro rata basis for losses suffered by the association. Southern Building and Loan Association vs. Anniston Loan and Trust Company, 36 SW 386, 54 Am. St. Rep. 858.

19. McCauley vs. Association, 37 SW 212, 213;  35 L.R.A. 244.

20. Ill. Phoenix Loan Association vs. Stringham, 81 Ill. App. 48.

21. What would normally be considered borrowing is regarded as "permitting a member to receive money on his shares of stock in advance of maturity."  Homestead Savings and Loan Association, Act., 1873, Ill. see Smith-Hurd Stat. c33 Para. 213.

22. Groover vs. Pacific Coast Savings Association, 164 Cal. 67, 127 P 495.

23. Bertche vs. Equitable Loan and Investment Association, 147 Mo. 343, 48 5W 954, 71 Am. St. Rep. 571.

24. Englehardt vs. Fifth Ward Permanent Dime Savings & Loan Association, 148 NY 281, 42 NE 710: Annotation: 4 L.R.A. (N.S.) 1947.

25. Groover vs. Pacific Savings Association, 164 Cal. 67, 127 Pac. 495.

26. West Winsted Savings Bank & Bldg. Assn. vs. Ford, 27 Conn. 252, 71 A. Dec. 66.

27. Welch vs. Wadsworth, 30 Conn. 149, 79 Am. Dec. 236. 129

28. Pennsylvania Mutual Life Insurance Company vs. Lederer, 252 US 523. Stock Company.

29. Carnes vs. Iowa State Traveling Men’s Association. 106 Iowa 281, 76 NW 683.

30. Paragraph 7530, 34 Am. Juris 2d.

31. For further information on insurance companies consult Best’s Insurance Reports: (Life-Health) (Property-Liability) etc. A.M. Best Company, Morristown, New Jersey, 1969.  These manuals are available in most large public libraries.  It will also state whether the company is a cooperative mutual or capital stock company.