Book Notes: The Sword of the IRS

“My father,” Elliott Roosevelt observed of his famous parent, “may have been the originator of the concept of employing the IRS as a weapon of political retribution.”

This is the first line from this week’s reading of New Deal or Raw Deal.  I am going to spend my time today talking about FDR employing the IRS to silence dissent within the United States.  I’ve heard pundits talk about the government using IRS audit’s against people before, but never took it seriously.  Mr. Folsom has really opened my eyes to the reality.

In this chapter, Mr. Folsom points to a number of examples where FDR ordered the IRS to investigate people who were critical of his policies.  He also told the IRS to stop investigations that might harm those who were helping him (such as then congressman and future president LBJ).  The scariest part of this was that FDR was willing to use the IRS as a weapon against private US citizens.  Take for example William Randolph Hearst (newspaper publisher), or Father Charles Coughlin (priest and radio personality).  In both of these cases, Roosevelt had the IRS comb through the financial records of these individuals looking for something he could use against them.  Why?  They dared to oppose the New Deal.  Neither of these individuals were found guilty of anything.  Others, such as Moses “Moe” Annenberg, weren’t so lucky.

Moe Annenberg made a fortune as an investor.  He sold horse racing forms, wall sheets, and the wire service for horse racing.  “He developed the largest horse-racing network in the country, and made many millions of dollars from that enterprise alone,” Folsom tells us.  Annenberg also owned and ran the Philadelphia Inquirer.  This is where Mr. Annenberg ran afoul of FDR and his IRS agents. FDR couldn’t allow Annenberg to continue to publish his ideas against the New Deal and the administration. Because Annenberg’s assorted businesses were complicated, it was difficult to file taxes and not have something wrong. The IRS alleged that Annenberg owed $8 Million in back taxes. He offered to pay all of it. However, that wasn’t good enough for Roosevelt. However…

…the Roosevelt administration wanted back taxes and and Moe Annenberg locked up in jail. As Elmer Irey told Morgenthau, “They are not going to have the opportunity to pay the tax [and avoid prison].” When Morgenthau and Roosevelt discussed the matter over lunch on April 11, 1939, Morgenthau asked Roosevelt if he could do something for the president. “Yes,” Roosevelt said. “I want Moe Annenberg for dinner.” Morgenthau responded, “You’re going to have him for breakfast – fried.” {all emphasis and notes in the original}

Roosevelt, the idol of today’s progressive movement, wanted Annenberg to be punished and he wanted an example made of him. He got his wish. Annenberg would be forced to pay $8 Million and serve a 3-year prison sentence. The prison term kept the paper from being as hard on New Deal policies as it had been with Annenberg at its helm. FDR got a political opponent silenced, and an additional $8 Million to fund New Deal policies. Everyone who wanted to criticize the New Deal got a pretty clear message.

For Next Week: I plan on covering up to the beginning of Chapter 15 for next week.  Have a good week everyone.