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Profile: Jerome Daly

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Jerome Daly was a participant or observer in the following events:

Arthur Porth, a Wichita, Kansas, building contractor, files a claim in a Kansas court to recover his income tax payment of $151. Porth argues that the 16th Amendment is unconstitutional because it places the taxpayer in a position of involuntary servitude contrary to the 13th Amendment. The court rules against Porth, but the defeat does not stop him. For 16 years Porth continues battling the income tax requirement, finding new and inventive challenges to the practice. He claims that the 16th Amendment “put[s] Americans into economic bondage to the international bankers,” a claim that the Southern Poverty Law Center will call “a thinly veiled anti-Semitic reference to the supposed ‘international Jewish banking conspiracy.’” He also argues that because paper money is not backed by gold or silver, taxpayers are not obligated to pay their taxes because “Federal Reserve notes are not dollars.” In 1961, Porth files an income tax return that is blank except for a statement declaring that he is pleading the Fifth Amendment, essentially claiming that filling out a tax return violates his right of protection from self-incrimination, a scheme that quickly becomes popular among anti-tax protesters. Porth becomes an activist and garners something of a following among right-wing audiences, traveling around the country distributing tax protest literature that includes a book, A Manual for Those Who Think That They Must Pay an Income Tax. He even issues his own “arrest warrants” against “bureaucrats” whom, in his view, violate the Constitution. In 1967, Porth is convicted of a number of tax evasion charges, but, as the Anti-Defamation League will later write, “he had already become a grass-roots hero to the nascent tax protest movement.” His cause is championed by, among others, William Potter Gale, who will go on to found the racist, anti-government Posse Comitatus movement (see 1969). Gale uses the newsletter of his Ministry of Christ Church, a church espousing the racist and anti-Semitic theology of Christian Identity (see 1960s and After), to promote Porth and the early tax rebellion movement. Porth exhausts his appeals and goes to jail; though sentenced to five years’ imprisonment, he only serves 77 days. One of Porth’s most active followers is his lawyer, Jerome Daly, whose activism eventually leads to his disbarment (see December 9, 1968 and After). Daly meets Porth in 1965 and files his own “protest” tax return just days before Porth is indicted by a grand jury. Daly is also convicted of tax evasion; in 1969, a federal appeals court will issue a ruling invalidating what has by then become known as the “Porth-Daly Fifth Amendment Return.” Porth receives the support of several far-right organizations, many of whom tie their racist views into his anti-tax protests. In a 1967 article for the far-right American Mercury magazine, tax protester and editor Martin A. Larson writes, “The negroes in the United States are increasing at a rate at least twice as great as the rest of the population,” and warns that the tax burden posed by blacks “unquestionably doomed… the American way of life.” Larson will later write regular columns for the white supremacist magazine The Spotlight, in which he will call black women prostitutes whose “offspring run wild in the streets, free to forage their food in garbage cans, and grow up to become permanent reliefers, criminals, rioters, looters, and, in turn, breeders of huge litters of additional human beings belonging to the same category.” He will also write several books promoting Porth’s anti-tax protest strategies. (Southern Poverty Law Center 12/2001; Anti-Defamation League 2011)

Minnesota attorney Jerome Daly defends himself in a lawsuit filed by the First National Bank of Montgomery, in a case later cited as First National Bank of Montgomery v. Daly. The bank sues Daly in Credit River Township, Minnesota, after foreclosing on his property for nonpayment of his mortgage, and seeks to evict Daly. Daly, a well-known anti-tax protester who has filed “protest” tax returns in the past (see 1951-1967), argues that the bank never actually loaned him any money, but merely created credit on its books. Since the bank did not give him anything of tangible value, he argues, the bank has no right to his property. Both the jury and the Justice of the Peace presiding over the case, Martin V. Mahoney, agree, and declare the mortgage “null and void.” In his ruling, Mahoney admits that the verdict runs counter to provisions in the Minnesota Constitution and some Minnesota statutes, but contends that such provisions are “repugnant” to the Constitution of the United States and the Bill of Rights in the Minnesota Constitution. Mahoney finds in his ruling that all Federal Reserve paper money has no intrinsic value. Initially, Daly retains his right to the property and has his mortgage revoked, but the bank appeals the case and the verdict favoring Daly is reversed, as is a similar lawsuit brought by Daly against another bank. The Minnesota Supreme Court begins proceedings against Mahoney and Daly for “constructive contempt” of the law. Mahoney’s death in 1969 voids the proceedings against him, but Daly is subsequently disbarred for his arguments, which the Minnesota Supreme Court finds entirely fraudulent, “unprofessional,” and “reprehensible.” The case and its reasoning will be frequently cited in lawsuits challenging the US banking system, particularly the practice of “fractional reserve banking.” The case has no value as precedent, but will often be cited by groups supporting a government-owned central bank or opposing the Federal Reserve system. (State of Minnesota, County of Scott, First National Bank of Montgomery v. Daly 12/9/1968 pdf file; State of Minnesota, County of Scott, First National Bank of Montgomery v. Daly 1/12/1969 pdf file; US District Court for the District of Utah 10/28/2008; Minnesota State Law Library 5/27/2010)

Former lawyers Jerome Daly and William Drexler, disbarred for their actions as anti-tax protesters in Minnesota (see December 9, 1968 and After), are sentenced to lengthy prison terms for founding and marketing fake churches (the Basic Bible Church and the Life Science Church) for the purpose of allowing people to avoid paying income taxes. Daly and Drexler are proponents of the popular “Fifth Amendment Return” that features citizens refusing to pay federal income taxes on Fifth Amendment grounds (see 1951-1967) and the idea that Federal Reserve paper notes are not legitimate currency because they cannot be redeemed “in specie”—a citizen cannot go to a bank and redeem a paper note for the note’s value in gold or silver. (Anti-Defamation League 2011)


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