by Steve Berry
“What’s in the satchel?” he repeated.
“Proof of a conspiracy that will bring America to its knees.”
“That’s a bold statement.”
“Who do you work for?’
“Justice Department.”
“I can’t let anything happen to Jelena. She doesn’t deserve this. He said he was coming back after he looked over the documents.”
He zeroed tight on Howell’s eyes and said for the last time, “Tell me what’s in that satchel.”
KIM ENTERED THE CABIN HANA HAD BOOKED FOR THEM. IT CAME with twin beds and a small bathroom with shower. They were both traveling on false passports, under aliases, which he’d obtained in Macao. He liked the ability to move about the world unobstructed and, compared with the time he’d tried to gain entry into Japan years ago, the state of the art in forgeries was far superior. Besides, no one paid him any attention.
“How is our guest?” he asked.
Hana pointed to the bed where the woman lay, laboring under the effects of the same drug used on Malone and Larks. He found it so much easier to travel with drugs as opposed to guns. No one ever questioned them. Most people today carried small pharmacies around with them.
“She was no trouble,” Hana said.
They were two decks down from the dining salon, toward the bow. He saw she noticed the satchel, and he smiled at their success.
“Time for us to see if all this was worth it.”
MALONE LISTENED AS HOWELL EXPLAINED THAT THE 16TH AMENDMENT to the Constitution came as a direct consequence of an 1895 Supreme Court decision that held taxes on incomes must be apportioned, under Article I, Section 2 of the Constitution. That would mean people living in less populated states would pay a higher tax on their income so that their portion of the overall total was equal to that of other more populated states. That fundamental unfairness had been intentional on the part of the Founding Fathers, as they were no fan of direct taxes. Apportionment became the way to discourage them.
And it worked.
Direct taxes were avoided by Congress.
But during the early part of the 20th century sentiment changed. The Gilded Age had produced clearly defined classes of “haves” and “have nots.” Social unrest had firmly taken hold, and the idea of a tax to “soak the rich” became popular among liberals in both the Democratic and Republican parties. Several times Democrats introduced bills in the House of Representatives to tax higher incomes, but each time the conservative branch of the Republican party killed the measure in the Senate. That’s when Democrats began to call Republicans “the party of the rich.”
And the label stuck.
Causing reelection anxiety.
In April 1909 the Democrats proposed another bill for a national income tax as a ploy to embarrass Republicans and force them to publicly acknowledge their support for the wealthy. Nobody gave the bill any chance of passage—and even if it did, there was still the matter that unapportioned income taxes had, fifteen years earlier, been ruled unconstitutional. But to everyone’s amazement Teddy Roosevelt and other liberal Republicans endorsed the measure. Conservative Republicans then fell into a panic. Oppose the bill and they would certainly become “the party of the rich.” Support the bill and they would lose their political base—which was the rich.
So they opted for an end run.
In June 1909 President William Taft, a Republican, caught the Democrats off guard and proposed the 16th Amendment. At the precise moment when it appeared that Democrats would pass an income tax bill, the Republicans chose to submit the entire matter to the states for their approval. Even better, if the amendment was approved, it would eliminate the Supreme Court’s opposition to income taxes, overruling the apportionment requirement, and allowing the tax to be imposed equally nationwide. The Republican strategy seemed brilliant on paper, as the amendment had little chance of passing in Congress and, even if it did, three-fourths of the states would surely reject it.
But they were wrong.
The Senate backed the amendment 77–0 and the House 318–14.
Then state after state ratified until, on February 12, 1913, Secretary of State Philander Knox declared the amendment “in effect.”
“When the first income tax was approved in 1913,” Howell told Malone, “it was only 1 percent on the first $20,000 and 7 percent above $500,000. That would be 1 percent on the first $298,000 in today’s dollars and 7 percent above $7,460,000. By 1939 only 5 percent of the population was required to file a return. Today more than 80 percent have to file.”
Howell sounded like a true fanatic, who loved to rely on statistics to support their position.
“The collection process changed in 1943. That’s when FDR started withholding from wages and salaries. Income taxes began to be collected right at the payroll window, before they were even due to be paid by the taxpayer. That’s when the whole thing went from a tax on the rich, to a tax on the masses.”
He studied the salon again and saw no sign of Kim.
“I’m worried about Jelena,” Howell said.
“You keep talking. I assure you, she’s fine. For now.”
KIM OPENED THE SATCHEL AND REMOVED A THICK SHEATH OF papers clamped together with a black metal clip. Several hundred pages, all of which appeared to be copies, except for one. He scanned through the pile, taking in bits and pieces. Clumps were stapled together.
One of the copies caught his eye.
A report.
Department of Justice
Office of the Solicitor
Memorandum
February 24, 1913
Ratification of the 16th Amendment to the
Constitution of the United States
This he knew about from Howell’s book. It had been written by the then solicitor general to the secretary of state. There were references to it in other documents—that much he’d learned from Howell’s book—but the report itself had never been seen publicly. Apparently it had been hidden away in secret classified files within the American Treasury Department, found by Paul Larks.
Excitement surged through him.
Part of believing Howell was believing this report existed.
And here it was.
MALONE LISTENED TO HOWELL, TRYING TO ASSESS THE YOUNGER man’s credibility.
“I don’t know you from Adam,” Howell said. “I shouldn’t even be talking to you. I’ve spent three years hiding from the government.”
“I don’t blame you for not trusting me. You’re right, I was sent here to bring you back. But things have changed. Larks is dead, and your lady friend is in deep trouble. So do yourself a favor and keep talking.”
“Are you always so pleasant?”
“Actually, this is a good day for me.”
The younger man shook his head. “I wrote my book using bits and pieces and lots of conjecture. I admit that. But it was all I had. I heard the story about Mellon and FDR years ago. One of those urban legends American history is full of. Mellon supposedly had proof that the 16th Amendment was illegal. He also had evidence that America owed a huge debt to the heirs of a man who loaned us money during the Revolution.”
“That why you don’t pay taxes?”
“Damn right. It’s illegal what they’re doing. I started a website and tried to pass the word, but all I got was the IRS coming to visit. They showed up one day and ransacked my whole house. Oh, yeah, they had a search warrant, but they weren’t after anything. They just came to deliver a message.”
“Which your failure to pay taxes gave them probable cause to do.”
“I know. They indicted and tried me fast. I went to the first day of the trial and saw it was all a farce, so I got the hell out of Dodge before they convicted me. Which they did, without me being there. I’ve been on the run ever since.”
“You didn’t have to surrender your passport when they indicted you?”
Howell shook his head. “The morons never even asked if I had one, and I didn’t volunteer a thing. I got the
passport a few years before for a Caribbean cruise. It definitely came in handy when I ran. I drove from Alabama to Mexico, then just disappeared, ending up in Croatia. I figured nobody really gave a damn about some small-time tax evader.”
He figured wrong. “When did Paul Larks appear?”
“He contacted me through my website. The part about the government owing money to those heirs turns out to be true. A few months ago Larks was tasked with finding out if there was anything in the official records about a debt owed to Haym Salomon. That request came from the president himself. There wasn’t much, but he did find out that Mellon, in the 1920s, may have taken proof of that debt from Treasury records. Then Larks came across stuff on the 16th Amendment in the same classified files. Stuff that shocked him. He was a quirky old guy. Kind of weird. For career government, he had little love for his employer. It pissed him off that the U.S. may have been committing tax fraud since 1913. He went to the Treasury secretary, who ordered him to forget he ever saw any of it. That just made him madder. Thank God that before he lost his job he managed to copy a bunch of stuff. That’s what he was bringing to me.”
“Why you?”
“He found my book online, read it, and told me he may actually have some stuff to prove I was right. It bothered him that people like me were being prosecuted and sent to jail. And it really upset him that his boss told him to forget it all. He told me what he had, which did fill in some of the gaps. Larks was right. It’s wrong what the government is doing.”
“Where does Kim fit in?”
“With me? Nowhere. I thought he was another guy the IRS was after. He called himself Peter From Europe. He and I talked online about the usual stuff. Taxes, jail, that sort of thing. Only with Larks did I discuss details.”
Malone figured Kim was playing both ends against the middle, working Howell and Larks, learning what he could from both.
“Larks finally mentioned to me that he’d been talking to a Korean,” Howell said. “But I never connected the two. Why would I? He told me that the Korean wanted to meet. There was no way I was going back to the States, but he said that was not a problem—the guy was overseas. So Larks offered to pay for my cruise and reserved me a ticket. I just changed it into Jelena’s name. After talking it over some more, Larks and I agreed that we didn’t want foreigners involved. We’d do this ourselves. We needed a face-to-face anyway, so we took advantage of the trip. Look, shouldn’t we be doing something? Searching? Jelena is in trouble.”
“It’s a big ship with nowhere to go until we dock.”
A picture was forming in Malone’s head, but a piece was missing. “Treasury sent an agent here to get those copies back. You clipped her into the water back in Venice. How did you know she was here?”
“I didn’t. I just saw her zeroing in on Jelena, so I took her out. I didn’t know who she was.”
“So tell me what you haven’t said. And don’t lie to me. I’ve tried to make this clear, but you don’t seem to get it. I’m the only friend you’ve got.”
He could see Howell was beginning to believe that.
“There is one document in what Larks brought that’s extra special. The only original among all those copies. That’s what I really wanted to see. It’s why Larks came.”
He waited.
“It’s a crumpled sheet of paper that Andrew Mellon supposedly gave FDR.”
THIRTY-TWO
Department of Justice
Office of the Solicitor
Memorandum
February 24, 1913
Ratification of the 16th Amendment to the
Constitution of the United States
Previously, the Secretary of State referred to the Solicitor’s Office for determination the question whether the notices of ratifications by the several states of the proposed 16th Amendment to the Constitution are in proper form, and if they are found to be in proper form, it is requested that this office prepare the necessary announcement to be made by the Secretary of State under Section 205 of the Revised Statutes.
Eleven days ago this office forwarded to the Secretary of State a detailed memorandum concerning problems noted with the ratification process for the 16th Amendment. I will not reiterate what was stated therein, except to question why no action was taken relative to its contents. It seems that something more than silence is warranted, given the serious legal questions raised (which was why the example from Kentucky was included). Yet instead of a further investigation, the Secretary of State has now requested legal clarification as to his powers relative to declaring a constitutional amendment ratified. The Supreme Court has never directly considered this precise issue, but it has ruled in Field v. Clark, 143 U.S. 649 (1892), that
What the president was required to do was simply in execution of the act of Congress. It was not the making of law. He was the mere agent of the law-making department to ascertain and declare the event upon which its expressed will was to take effect.
The same principle is true of the Secretary of State, relative to declaring a proposed amendment to the Constitution ratified. Congress has delegated to him the authority to declare the “expressed will” of the states relative to any proposed amendment. The Secretary of State is the sole administrative official who can make that legal determination. How that is done by the Secretary is for him alone to decide. History is instructive, though. As to all other constitutional amendments previously approved (and disapproved) since 1787, in every instance the Secretary of State declared that the requisite number of states had notified his office of their approval or disapproval. That declaration has never been questioned by any court.
Kim stopped reading.
Here was some proof that there were doubts, in 1913, about the validity of the 16th Amendment to America’s Constitution, just as Anan Wayne Howell had speculated. The amendment, he knew, was declared valid on—he checked Howell’s book—February 25, 1913, the day after the memo he held was sent from the solicitor general to the secretary of state. But as Howell noted in his book, that official action merely said the amendment was “in effect,” not “properly ratified.” A play on words, for sure, but an important one. Perhaps done by the secretary of state in response to the solicitor’s written concerns?
But what were those concerns?
The memorandum was silent on details, referring instead to another document dated eleven days earlier. He rummaged through the remaining pages and found no copy of that communication. But he did find a report, from the secretary of Treasury, Henry Morgenthau, to the president of the United States, dated January 26, 1937. This, too, had been referred to in Howell’s book.
More unsubstantiated fact there.
Now here it was.
Per your presidential order, the one dollar bill was redesigned in 1935. The changes incorporated at that time were as follows: On the obverse, the blue numeral 1 was changed to gray and made smaller; the gray ONE to the right was removed; the Treasury seal was made smaller and superimposed by WASHINGTON, D.C.; and a stylized ONE DOLLAR was added over the Treasury seal. The reverse was also modified to include the Great Seal of the United States. Per your specific request (as noted on the next page) the seal was depicted with its reverse side to the left, obverse to the right.
He flipped to the next page and studied a copy of the bill’s image, noting that Roosevelt had both approved and specifically asked for the seal to be depicted as noted.
He turned his attention back to the memorandum, which explained that the reverse of the Great Seal of the United States, as it appeared on the redesigned $1 bill, featured a barren landscape dominated by an unfinished pyramid of thirteen steps, topped by the Eye of Providence. At the base of the pyramid were engraved the Roman numerals MDCCLXXVI, 1776. At the top stood a Latin phrase, ANNUIT COEPTIS, which meant “God favors our undertaking.” At the bottom of the seal was a semicircular banner that proclaimed NOVUS ORDO SECLORUM, taken from Virgil, meaning “a new order of the ages,” a reference to the new American era. A string of thirt
een pearls extended outward toward the bill’s edge.
The obverse of the Great Seal featured a bald eagle, the symbol of the United States. Above the eagle was a radiant cluster of thirteen stars arranged in a six-pointed star. The eagle’s breast was covered by a heraldic shield with thirteen stripes that resembled those on the American flag. The stars and stripes stood for the thirteen original states of the union. The eagle held a ribbon in its beak reading E PLURIBUS UNUM, “Out of many states, one nation.” In its left talons the eagle grasped thirteen arrows. In its right talons it held an olive branch with thirteen leaves and thirteen olives. Together, those represented the opposing powers of war and peace. Another string of thirteen pearls extended outward toward the bill’s edge.
Your question relative to a message hidden within the Great Seal was considered. The fact that drawing lines between letters A M S O N on the seal’s reverse side not only forms a six-pointed star, but also provides letters that form the word MASON cannot be explained. The Great Seal was created over a 23 year period, starting in 1776 and ending in 1789. Many designs were considered and rejected. Symbolism abounds throughout the seal, especially with the repeated use of 13 in much of its art. But all of that was intended to reflect a patriotic flavor, a celebration of the newly formed United States of America. No evidence could be found of any intentionally inserted secret messages.
The latest redesign of the one dollar bill occurred over a period from late 1933 to the end of 1934, per your order. Many career Treasury officials participated, most of whom were hired when Mellon was Treasury Secretary, but no influence from him on the redesign has been uncovered.
