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The Democrat Elected President By Republicans

Grover Cleveland was one of America's best presidents, and one with a unique electoral history.

I'M BETTING VERY FEW AMERICANS TODAY are much aware of Grover Cleveland. But we all should be. Cleveland's history is fascinating for the politics involved, and because he truly was an admirable president, far above the cut of those who have held that office since.

Furthermore, it was Cleveland who revived the income tax in 1894 after 22 years of dormancy, thus leading to the Pollock decision and, in turn, the Sixteenth Amendment. The reasons behind this sequence of events bust modern state-serving myths about the nature of the tax, and nicely illustrate its true nature.

CLEVELAND WAS ELECTED PRESIDENT TWICE, but not in succession, as in the case of all others who have held that office for more than a single term. Cleveland served as our 22nd and 24th president, being elected first in 1884, and then again in 1892.

In both elections Cleveland won both the electoral college vote and the popular vote. In the intervening 1888 election he again won the popular vote, but carried only 18 states to Benjamin Harrison's 20, thus being given a four-year hiatus before being called back to the Oval Office to fix all the damage Harrison would do.

In fact, Cleveland's mandate in both the 1884 and 1892 elections was, in very large part, the rescue of America from rampant government corruption. Crony capitalism had been the order of the day in DC from the early 1860s onward, when the Lincoln administration instituted Hamiltonian policies of protectionism, banking centralization and corporate subsidies known as the "American System". By 1884 the American people were very aware of the corruption and thoroughly sick of it.

A good example of the harmful mainstream Republican practices of the time is the notorious Crédit Mobilier scandal which broke into widespread public consciousness in 1872. In that particular affair, dozens of office-holders were revealed as having been bribed for years by national railroading interests which had in turn been receiving massive federal subsidies. Everyone involved had been getting filthy rich the whole time, with everyone else paying the bill, one way or another.

THE OVERT STENCH OF FEDERAL CORRUPTION was powerful enough that by the late 1860s a large contingent of Republicans began breaking away from the corrupt party mainstream. By 1872 these anti-corruption republicans had organized an alternative party called the Liberal Republicans (meaning "liberal" in the classic sense, known today as "libertarian").

The problems the Liberal Republicans emerged to address were so significant and entrenched that in the 1872 election the Democrat Party leadership nominated no candidate for president. Instead, their convention endorsed the Liberal Republican ticket, which they believed more likely to beat mainstream Republican Ulysses S. Grant than anyone the Democrats could run against him.

Unfortunately, the Liberal Republican's presidential nominee, newspaperman Horace Greeley, was not much to the liking of grassroots Democrats and many chose to simply stay home on election day. This gave Grant his second term, and the corruption continued (if not intensified).

IN 1876, MAINSTREAM REPUBLICAN Rutherford B. Hayes succeeded Grant. Hayes only took the office over his Democratic opponent Samuel Tilden in a dodgy contest in which it appears likely Hayes lost the popular vote (though the accuracy of vote-counting in the South leaves this impossible to know for certain) and in which he was assigned 20 electoral votes after the election by a majority-Republican commission.

Nonetheless, Hayes was himself nominated as a reform candidate with a reputation for honesty, reflecting the ongoing political significance of the ongoing institutionalized corruption in Washington. In fact, Hayes was only narrowly nominated over rival James Blaine, an alternative candidate much favored by the core mainstream party and widely seen as party to the corrupt practices leading to the Liberal Republicans breakaway of four years prior.

Hayes, in turn, having kept a pledge to not run for re-election, was succeeded by Republican James Garfield in 1880, and after Garfield's assassination the next year, by Garfield's Vice President, Chester Alan Arthur. Arthur, widely seen as corrupt to begin with, grew a bit in office, perhaps, but in no way satisfied the simmering demand for dramatic redress of popular grievance over the now decades-long institutionalized corruption of the federal government.

THIS BRINGS US TO GROVER CLEVELAND, the Democrat candidate for president in 1884. Cleveland, then the Governor of New York, had a deeply-rooted reputation for rigid honesty and Jeffersonian principles, both polar opposites of the Hamiltonian practices and policies in which Washington had been immersed for 22 years, and of which the American people were sick to death.

Against Cleveland, the Republican mainstream nominated Rutherford Hayes's corruption-tainted opponent for the nomination in 1876, James G. Blaine. As in 1872 with the breakaway of the Liberal Republicans, the prospect of Blaine gaining the presidency and perpetuating the evils infesting the federal government since the Lincoln regime took power (and which had been somewhat ameliorated, or at least taken off center stage, by the reformist-ish Hayes administration and, to a lesser degree, that of Arthur), the honest Republican grass-roots again revolted against the mainstream machine.

This time the breakaway Republicans called themselves "independents", rather than formally organizing as the "Liberal Republican Party", but were given the smear-label "mugwumps" by their mainstream Republican detractors. The expression is from an Algonquin Indian word roughly meaning "supercilious", and was meant as a chastisement for the reformists' high-minded rejection of the swamp in which the mainstream wallowed.

Come election day, the reformist Republican "mugwumps" turned out for Cleveland, who handily defeated Blaine in both the electoral college and the popular vote. In the end, while the Democratic Party support for the Liberal Republican candidate in 1872 failed to beat the corruption machine, Republican defections to the Democrat's candidate in 1884 finally did. A fine episode of true grass-roots power went into the history books.

I'M NOT GOING TO SPEND PIXELS HERE on a comprehensive discussion of Cleveland's practices and policies in office, as admirable as they generally were (including, just by way of illustration, a hard-line gold-standard, non-interventionist foreign policy, anti-protectionism, anti-publicly-financed charity-- on the grounds that the Constitution provides no authority for it-- and much else). It is enough for my purposes in this commentary to have made clear that Cleveland was elected in order to clean up Dodge, so to speak.

Grover Cleveland was chosen in the (sound) expectation that he would to the greatest degree possible unravel and remediate the crony capitalist, favored-interest protectionist, centralizing and subsidizing Hamiltonian corruption pervading Washington and all its doings. And so he did.

In 1888, Cleveland again won the popular vote nationwide, but lost the Electoral College vote due to a vote fraud engaged in by mainstream Republicans on behalf of their swamp candidate Benjamin Harrison which cost him Indiana's votes, and the effects of divisions within the Democratic party in New York over local politics.

SO, FROM 1889 through the election of 1892, Benjamin Harrison was in place to remind Americans why they had so badly wanted an honest Jeffersonian like Grover Cleveland in office. For the most part, Harrison was just another of the protectionist, favored-interest subsidizing, nest-feathering and crony-capitalist creatures that had controlled Washington for so many years before him.

In 1892, Cleveland was back, spanking Harrison by wide margins in both the popular vote and the electoral college. As in 1884, the primary impetus of voter support for Cleveland-- apart from just a general preference for an honest Constitutionalist as president-- was the mandate given him to drain the swamp, and that brings us to the 1894 revival of the income tax, the Pollock ruling, and the 16th Amendment.

Unlike any American president of the modern era, Grover Cleveland knew what is actually taxed under the American income tax laws-- private gains from the exploitation of public resources. Hence, his prompt revival of the 22-years-dormant United States income excise as a key tool in his swamp-draining program.

After all, the problem Cleveland was there to fix was the profligate delivery of public-resource benefits to "connected" private interests (and the reciprocal delivery of private profits from the exploitation of those public resources to the corrupt, enabling public-office-holders). It was because Cleveland knew that the income excise falls only on activities and gains of this exact kind, and not on the earnings of the non-exploiting class of Americans who had entrusted him with his office, that he chose the income tax as his tool of reform.

SADLY, IT WAS IMMEDIATELY UPON the implementation of the revived tax that Charles Pollock, a stockholder in the national-railroading investment house of Farmer's Loan & Trust went to court to block the pre-distribution application of the tax to his excise-qualified dividends. Pollock's argument that a tax on his dividends amounted to a tax on his personal-property stock, and was therefore really a property tax requiring apportionment, prevailed in the Supreme Court.

As a result of the Pollock decision, Grover Cleveland's effort to reduce the incentives for crony capitalism failed. But only for the moment.

It was the Pollock court's thwarting of Cleveland's excise-solution to corruption that generated a clamor for an amendment to the U.S. Constitution to override Pollock and again revive the dormant income tax. In 1913, that's precisely (and exclusively) what happened, as nicely summarized by Treasury Department legislative draftsman F. Morse Hubbard in testimony to Congress in 1943:

[T]he amendment made it possible to bring investment income within the scope of the general income-tax law, but did not change the character of the tax. It is still fundamentally an excise or duty..."

SO, LET'S TRY TO REMEMBER the excellent Grover Cleveland. He was a great president, and his story nicely illuminates the real nature of the income tax and the Sixteenth Amendment by which it was restored to the American people as a proper damper on political corruption when properly understood and administered.

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Here's a video related to the article above:

Those interested can learn how Cleveland's Supreme Court picks ensured the proper construction of the Sixteenth Amendment against post-adoption efforts to defeat it and re-instate the Pollock decision's shield against taxation of privileged gains here.

The complete story of the Sixteenth Amendment can be seen here.