http://www.givemeliberty.org/features/taxes/philanderknox.htm
WHO WAS PHILANDER KNOX?
IS IT CREDIBLE THAT HE WOULD COMMIT FRAUD?
Understanding a crime or a misdeed involves learning not only what was done and who did it, but also what the motivation was. With a clear motive, evidence of the "what" and "who" becomes much more credible. Allegations that Secretary of State Philander Knox was not merely in error, but committed fraud when he falsely declared the 16th amendment ratified in 1913, require us to look at who he was to understand why he would commit such an act. The following sketch was prepared by the We The People Foundation For Constitutional Education and is condensed from Bill Benson's research report on the ratification of the 16th Amendment, "The Law That Never Was," Volume II (1985), pages 122-135.
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Philander Chase Knox was born in 1853 in western Pennsylvania, son of a bank cashier. While attending college in Ohio, he became closely acquainted with William McKinley, then the local district attorney, who was prosecuting a local tavern owner for selling alcohol to the college students. Knox took McKinley's advice and became a lawyer.
McKinley, having chaired the powerful House Ways and Means Committee in Congress, was elected governor of Ohio in 1891. Although he owed his election to support from both business and labor, he quelled the labor strike called by Eugene V. Debs against the Great Northern Railroad in 1894 by summoning federal troops.
McKinley won the 1896 presidential race with a great deal of support from Big Business, e.g., John D. Rockefeller's Standard Oil contributed $250,000 to the "front porch" campaign that defeated Bryan and his populist platform of returning to the constitutionally mandated monetary system and reform of McKinley's high tariffs that had allowed domestic manufacturers to raise their prices to a level that matched the artificially-induced higher prices of foreign goods, thus causing a severe depression. Knox helped in this financial and political effort that was directed by the wealthy Ohio industrialist Mark Hanna, who was appointed to a vacant U.S. Senate seat the following year by Ohio's governor. McKinley had already been saved from personal financial ruin by help from his old friend, Philander Knox, who had become wealthy as counsel to the very wealthy.
Knox came to be regarded as one of the ablest lawyers in the country, his repute due in no small measure to his being counsel for Carnegie and Vanderbilt and their corporate enterprises. He was instrumental in Carnegie's big victory in a crucial patent case in which the most important invention for the manufacture of crude steel was at stake. In 1892, he defended Henry Frick, Carnegie's steel plant manager, who was being sued by the steel workers who had been beaten up by Pinkertons brought in by Frick during the infamous Homestead strike, a strike that was provoked by two of Carnegie's presidents, one of whom was also an attorney for J.P. Morgan. Knox also deflected prosecution and civil suit against Carnegie in 1894 after it was shown to Congress that Carnegie had defrauded the Navy with inferior armor plate for U.S. warships. Morgan himself had defrauded the U.S. Army in arms sales during the Civil War. And Knox averted prosecution of Carnegie after the president of the Morgan-controlled Pennsylvania Railroad testified that Carnegie had regularly received illegal kickbacks from the railroad. Knox's other big client at the time, the Vanderbilt family, was connected to Carnegie primarily through the railroad industry.
President McKinley offered Knox the post of U.S. Attorney General in 1899, but Knox had to decline, because he was then and for two more years engaged in arranging the merger of the railroad, oil, coal, iron and steel interests of Carnegie, J.P. Morgan, Rockefeller, and other robber barons into the largest conglomerate in history - U.S. Steel. This immense corporation encompassed the interests of nearly all the robber barons in what Knox's new client, J.P. Morgan, referred to as a "community of interest." One important component of the conglomerate was Consolidated Iron Mines in the Mesabi Range of Minnesota, which Rockefeller had fraudulently swindled from the Merritt family, who later successfully sued John D. for fraud, but had to settle for a fraction of the award because they ran out of money during Rockefeller's appeals.
After the U.S. Steel merger, Knox accepted McKinley's offer to make him Attorney General, an appointment that was personally promoted by Carnegie in a letter to McKinley and by Morgan in a personal visit to the White House. The appointment was strenuously and loudly opposed by anti-trust forces, since it would then be up to Knox to prosecute anti-trust law violations against the very robber barons who had been his clients for many years and who had made him a wealthy man. Sure enough, the public outcry to investigate the big new U.S. Steel monster that Knox had created met with Knox's response that he knew nothing and could do nothing, and nothing is what he did.
After McKinley's assassination in 1901, Knox continued as Attorney General under Theodore Roosevelt. Even though Roosevelt labeled himself as a "trust-buster," Knox saw to it that very little harm came to his benefactors. U.S. Steel was unscathed, and most of the actions that were taken against the railroad companies were largely done with the urging of the railroad giants themselves, who were the strongest advocates of federal regulation of the industry, because that regulation, with their own agents working in the federal commissions, enabled them to gain greater control over the industry, be protected from competition, and maintain prices. The best-known anti-trust case was against Northern Securities, a railroad holding company formed by Morgan as a show of strength for the benefit of Hill, Harriman, Rockefeller, and their bankers, Kuhn, Loeb & Company. The dissolution of Northern by the Supreme Court in 1904 was deemed "inconsequential" by the financial press, since the two major railroads it encompassed had not been competing anyway, and the defendants ended up suffering no loss. Knox, of course, did not pursue any of the criminal sanctions that he should have undertaken against his former allies and clients, but the case gave the appearance that Roosevelt was doing something and was a public relations success for the president. But Roosevelt, while touting himself as an anti-trust champion, disparaged and labeled as "muckrakers" those journalists who actually investigated and exposed the corrupt activities of the robber barons.
Harriman's great fortune had been acquired through a series of fraudulent maneuvers, key of which was legislation signed by Roosevelt, at that time governor of New York, allowing New York banks to invest in railroad bonds being sold by Harriman and his partners at inflated prices. Hill profited enormously from fraud, deceit, and outright theft involving vast amounts of public lands that were given to the railroads and then resold, or raped and then traded to the government for new lands. The Vanderbilt fortune had also gained greatly from fraudulent maneuvers involving railroad securities and Cornelius's evasion of taxes. When all this was investigated after Cornelius's death, Morgan came to the Vanderbilt's rescue (managing to take control of their New York Central Railroad in the process).
Knox persuaded Roosevelt that the anti-trust laws should be accompanied by increased regulation of business. He advocated and drafted federal statutes that gave his rich and powerful friends even more power and control over interstate commerce - setting rates and eliminating competition in restraint of trade - all under federal authority and with agents of the conglomerates appointed to and sitting on the governmental boards and commissions. This plan derived from and implemented a strategy set by Morgan and the other robber barons at a meeting in 1889. Knox continued in this vein as a U.S. Senator from Pennsylvania, being appointed to a vacant seat by Pennsylvania's governor in 1904 at the behest of several powerful capitalists, including Carnegie's man, former client Frick (which showed they approved of Knox's handling of anti-trust matters as Attorney General).
Knox, by now a multi-millionaire, was in the Senate when the Morgan-controlled financial Panic of 1907 hit, which led to a congressional inquiry into the monetary and banking systems. Senator Nelson Aldrich (father of the wife of John D. Rockefeller, Jr. and namesake and god-father of Nelson A. Rockefeller) led the inquiry producing the 1912 report that recommended a national bank (controlled and owned by the robber barons) and ultimately resulted in the Federal Reserve Act of 1913, co-authored by Aldrich and Robert Owens. Owens later testified to Congress that the banking industry conspired to create financial panics like the one in 1907 in order to rouse the people to demand reform - reform that would be directed by, and to the benefit of, the very financial experts who had caused the panic.
Knox resigned from the Senate and became Secretary of State under President Taft from Ohio in 1909. He was the most powerful figure in the Taft administration, and drew up the lists from which Taft appointed his other cabinet members, many of whom were intimately concerned with the giant corporations. He was Taft's primary confidante.
