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Crucial Economic History on Equality
Everyone should study the year 1910 to understand the times of our own lives 100 years later. Do we want 'the utter despoilment of the many for the benefit of a few?'

Editor's Note: An excellent resource for understanding inequality in economics is the newsletter Too Much. Below is the most recent edition, written as if it is 1910.

Politics in the contemporary United States can be a dispiriting affair. The rich always seem, in the end, to get their way — or at least substantially cut their losses. Many of us expected all this to change after the 2008 elections. But change has been slow. Momentum has been lost. Disappointment has been rife.

Ready for some cheering up? Consider this: A century ago, average Americans faced a political deck even more stacked than we do. They persevered anyway. And they won. They beat back a plutocracy that had made America safe for the most stunning concentrations of private wealth the world had ever seen.

That victory, to be sure, took many years. And that victory, over the past three decades, has been totally undone. But we can still take inspiration from what our forbears achieved. We can also learn from their achievement. About patience. About the importance of plugging away, even when plugging may seem pointless.

A hundred years ago, our counterparts understood that importance. This week, in Too Much, we’re going to try to convey a sense of their dogged determination — by going back those hundred years. On May 24, 1910, had Too Much been around back then, our coverage might have looked something like what you’ll find below.

We’ll return to our regularly scheduled 2010 programming next week. In the meantime, may we all walk away a bit wiser from this glimpse into a world not so terribly different from our own.

GREED AT A GLANCE 1910

Four weeks have passed since Mark Twain’s death, at age 74, in his Connecticut home. But Americans are still debating his legacy. What shall history record as his greatest contribution? Let us note, for the record, that Samuel Langhorne Clemens did not just leave us great literature. He named, and in the process shamed, an entire historical epoch. In 1873, in the early years of our modern plutocracy, Twain co-authored a novel that looked our nation’s new greed straight in the eye. He titled that novel, The Gilded Age: A Tale of Today, and the “Gilded Age” stuck, as a label for those times that so disgraced our democracy. The Gilded Age now belongs to history. The burden of that history belongs to us. Our Nation’s wealth remains concentrated beyond the level that outraged the young Mr. Clemens. We shall miss his wisdom, not just his humor . . .

By purest coincidence, last month also took from us our Nation’s most dangerous defender of the plutocrats that Mr. Clemens so often skewered. We are speaking, of course, about the recently deceased William Graham Sumner, the Episcopal minister who became, at Yale University, America’s most noted student of the new science of sociology. We owe the “Gilded Age” to Mark Twain. We owe “survival of the fittest” to Prof. Sumner. For four decades, until his retirement from Yale last June, Sumner attacked “the diatribes against ‘the rich’ which are afloat in our literature.” He preached that the “aggregation of large fortunes is not at all a thing to be regretted” and saw “no reason to desire to limit the property which any man may acquire.” For the poorest among us, Prof. Sumner had little sympathy. Attempts by our government to “save individuals from any of the difficulties or hardships of the struggle for existence,” he believed, privilege the unfit, at the expense of social progress. These abominable ideas, we fear, may outlast Prof. Sumner . . .

That struggle for existence may be getting a little less brutal. This past Saturday, the governor of New York signed into law the Nation’s first legislation to prohibit the employment of all boys after ten o'clock in the evening and before five o'clock in the morning. George Hall, the secretary of the New York Child Labor Committee, believes this measure “will do much to stimulate similar action by other Legislatures.” We certainly have need of more stimulation. The 1910 Census, completed last week, appears likely to count 2,000,000 children ten to fifteen years old engaged in gainful employment. Many tens of thousands more will not be counted, since the Census does not enumerate children under age ten who labor in tenement home work or in the cotton and sugar beet fields . . .

The National Child Labor Committee has been working to end the exploitation of our children since its founding in 1904. Why has this admirable organization met with such limited success? Dr. Felix Adler of Columbia University, the Committee's first chairman, gave us the reason three years ago in a Carnegie Hall address entitled “The Evils of Surplus Wealth.” No labor comes cheaper than child labor, Dr. Adler advised, and the wealthy who employ it care not about the physical, mental, and moral growth of our children. The many fortunes built up upon child labor, he continued, exert a corrupting influence upon our politics. Stalwarts in our struggle for social justice may recall that years ago, in a 1880 Society for Ethical Culture lecture in New York’s old Chickering Hall, Dr. Adler offered an antidote to this corrupting influence. He called for a graduated tax that would reach 100 per cent on any income over the amount “amply sufficient for all the comforts and true refinements of life.” Later this year, Dr. Adler will be lecturing at the new hall of the Ethical Culture Society at Central Park West and Sixty-fourth Street . . .

We are willing to wager that James J. Hill will never happen by to listen to Dr. Adler lecture. Mr. Hill, the chairman of the Great Northern Railway, is much too busy expounding his own views on our current “world-wide financial delirium.” Mr. Hill holds a fortune estimated at between $100,000,000 and $300,000,000. He does not seem eager to surrender any portion of these riches. This past March, in Minnesota’s capital of St. Paul, Mr. Hill informed an audience of civic leaders that “the modern theory that you can safely tax the wealthy is just as obnoxious as the medieval theory that you can safely oppress or kill the poor.” The primary cause of our current price problem, he also said, rests with our rising worker wage rate, a development we must “resist.” Last November, in a newspaper interview, Mr. Hill blamed the extravagance of “the American people” for our economic difficulties. Asked how the American people as a whole could be extravagant on an average wage of $437, Mr. Hill replied that extravagance is relative. Mr. Hill should certainly understand extravagance. His St. Paul home, completed in 1891 for $931,275, has thirteen bathrooms, twenty-two fireplaces, sixteen crystal chandeliers, and a one-hundred-foot grand reception hall.

At Long Last, a Tax Levy on High Incomes?

The balloting later this year for state legislative seats may well determine whether democracy or plutocracy prevails in our Nation.

Will the citizens of our Nation who go to the polls this November ever live to see a federal income tax? Were the question to appear on November’s ballot, as a New York Times report noted last August, “there would be little doubt of the result.” We would have a federal income tax because the great majority of Americans so clearly support the taxation of the income of our wealthy.

Sixteen years ago, in 1894, Congress acknowledged this reality and passed into law our first federal income tax since the Civil War years. This new levy placed a two per cent tax on income over $4,000, a threshold that applied income taxation only to those among the richest class of our population.

At the time, as Dr. Charles B. Spahr has demonstrated, labor incomes in our Nation ranged “from two hundred dollars a family, on the Southern farms, to a thousand dollars among the most skilled workmen in the Northern cities,” and only one professional man “in a hundred” received as much as $5,000 a year from his profession.

Overall, Dr. Spahr concluded, the wealthiest one per cent of our families in the 1890s received “nearly one-fourth of the national income” and “a larger income than the poorest fifty per cent.”

This one per cent would never see a dollar of their grand incomes subjected to income taxation. The Supreme Court of the United States, just nine months after the 1894 income tax legislation became law, declared the tax unconstitutional by the barest of margins, with five justices against the tax, four in favor.

We shall long remember Justice John Harlan’s eloquent dissent. This ruling against the income tax, he pronounced, invites “the dominion of aggregated wealth.” How prescient Justice Harlan has been! The years since the Supreme Court’s 1895 tax decision have seen an even greater concentration of our Nation’s wealth in the pockets of a precious few.

Over the course of these same years, our citizenry has become even more committed to income taxation, so much so that the members of the United States Senate most committed to serving “the dominion of aggregated wealth” have had to pose as open-minded servants of the people entirely willing to accept the taxing of income if that be what the people desire.

Last July, as a “compromise” to prevent the addition of an income tax amendment to the tariff bill, these members supported a legislative proposal to move to the states a Constitutional amendment that would permit the levy of a federal tax upon incomes. The Senate subsequently voted unanimously, seventy-seven in favor, null against, to pass this proposal.

The Chairman of the Senate Finance Committee, Nelson Aldrich of Rhode Island, and other close Senate friends of Wall Street blessed this Constitutional amendment legislation for one reason and one reason alone. They believe the amendment will fail to gain the approval of the thirty-five states necessary to make the amendment the Constitutional law of our land.

The gentlemen of the press, at least those expert in practical politics, believe Aldrich and his fellows accurate in their calculations. Those of us who have always supported income taxation do, however, have reason to believe that the Aldrich crew may come to rue their amendment diversion.

Last month, the legislature of the State of Maryland became the seventh state legislature to adopt the income tax amendment, the sixth since early this past February, after Kentucky, South Carolina, Illinois, Mississippi, and Oklahoma. State legislators in Georgia and Texas appear willing to vote favorably on the amendment matter this summer.

Of all these states, Maryland stands as undoubtedly the most significant. Last August, the New York Times stated that the Eastern States, “especially those of New England and the Middle Atlantic region,” should be placed in the rejectionist camp. The legislatures of these states, the Times account approximated, will likely never vote to “make wealth pay its share of the burden of government.”

Yet the legislature of Maryland has now spoken for the income tax proposition!

Still, the road to an income tax remains distinctly uphill. New York, Virginia, and Rhode Island have already rejected the amendment, and any sober forecast would have to conclude that our state legislatures, as currently dominated by the monied interests, do not have the votes necessary for ratification.

Might the elections for state legislative seats this November alter this political imbalance? We think this a possibility, even a strong possibility, provided that those of us who have campaigned on behalf of income taxation in the past deepen our advocacy in the months ahead.

We have history, after all, on our side. As President Roosevelt noted three years ago, “most great civilized countries have an income tax.” Germany has levied a tax on incomes since 1891, Sweden since 1897, Denmark since 1903, and France since last year. We tally ten important European nations with income tax statutes, in addition to Australia, New Zealand, Canada, and Japan.

Most importantly, the very first nation to ever levy a tax on incomes, England, has put into place for this year a new graded “super-tax” that, at its highest level, imposes as much as eight per cent tax on the highest English incomes.

We can follow England’s example. We can join the community of civilized countries. We need only exercise this November, to the utmost of our strength, our democratic franchise.

In Review 1910: On Our 'Utter Despoilment of the Many'

A revuew of: Gustavus Myers, History of the Great American Fortunes. Chicago: Charles H. Kerr & Company, 1910. Three volumes.

Gustavus Myers first gained public attention nearly a decade ago with the publication of his magisterial History of Tammany Hall, a scrupulously researched account of our nation’s most notorious and powerful political machine.

Mr. Myers has now brought forth an even more magisterial project, the story of America’s most wealthy, from colonial times to our present day. Mr. Myers, at the close of this narrative, observes that his new history will likely not be as enthusiastically welcomed as his first. He will be proved correct, we believe, in that observation.

The pillars of our communities will always applaud those who rake the muck our common politicians leave us. But Mr. Myers, in his history, points his pen at the possessors of our society’s most eminent fortunes. The arbiters of our social mores would have us consider these men of great wealth to be men of great ability, enterprise, and virtue.

Mr. Myers has no interest in either proving or disproving anyone’s virtue. His new work, as he himself states, offers “no history of personal traits, dispositions, or temperaments.” Instead, he has endeavored to present “a narrative of the means whereby properties have been acquired, and great fortunes possessed.”

The Myers narrative, drawn from the public record, will not hearten our plutocrats and their legions. This history lays bare “the frauds, shams, and robberies by which immense fortunes have been amassed.”

The defenders of these great fortunes, a multitudinous group, will no doubt dismiss Mr. Myers as just another conniving writer pandering to the “popular appetite for sensation.” But Mr. Myers has taken great pains to distance himself from other writers who have assailed our “malefactors of great wealth,” to use the phrase employed by our former President, Theodore Roosevelt.

Too many of these writers, Mr. Myers maintains, “hold up the objects of their diatribes as monsters of commercial and political crime.”

Men of immense wealth should not been seen as “monsters,” in the view of Mr. Myers. Instead, we should view them and their great fortunes as “the natural, logical outcome of a system based upon factors the inevitable result of which is the utter despoilment of the many for the benefit of a few.”

Mr. Myers has, in these three volumes, presented over one thousand pages of fact and citation. Yet he humbly describes his work as “incomplete.”

“For every one fraudulent transaction accidentally coming to public notice,” he explains, “scores of such transactions have unquestionably gone down into the sewers of time, unvisited by a ray of daylight.”

Some readers will no doubt wonder why the author, in his latest labor, has painted such a negative portrait. Some have already asked him: “Have not the founders and perpetuators of the great fortunes had their good qualities?”

Mr. Myers deems this question an “arrant superfluity.” Yes, of course, he replies, the perpetuators of our great fortunes certainly do have their “good qualities.”

“But do the good people who are so solicitous on this score,” he continues, “ever think of making the same interrogatory as to the hundreds of thousands of slum dwellers, or of the 50,000 (or so) convicts in the United States? Is any consideration or extenuation demanded for them? For the poor, the wretched, the degraded everywhere?”

We would do well to bring the new volumes of Mr. Myers into our homes. With their particulars, their passion, their relentless attention to the corrupt workings of our economic system, they will hasten the day when “greed and vice, poverty and crime” no longer define us.

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Quote of the Week

“The man who, having far surpassed the limits of providing for the wants, both of the body and mind, of himself and of those depending upon him, then piles up a great fortune, for the acquisition or retention of which he returns no corresponding benefit to the Nation as a whole, should himself be made to feel that, so far from being desirable, he is an unworthy citizen of the community; that he is to be neither admired nor envied; that his right-thinking fellow countrymen put him low in the scale of citizenship, and leave him to be consoled by the admiration of those whose level of purpose is even lower than his own.” - Theodore Roosevelt, Citizenship in a Republic, an address at the Sorbonne, Paris, France, April 23, 1910

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Stat of the Week

Earlier this month, during a presentation to the thirty-seventh Annual Session of the National Conference on Charities and Correction in St. Louis, the Rev. John A. Ryan estimated that considerably more than one-half of the male, adult wage earners of the United States are earning less than $700 annually. The New York Commercial has estimated that Mr. John D. Rockefeller has had annual incomes, in recent years, over $70,000,000 About Too Much

Too Much is published by the Institute for Policy Studies: Ideas into action for peace, justice, and the environment. 1112 16th St. NW, Suite 600, Washington, DC 20036. (202) 234-9382.




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Date Added: 5/24/2010 Date Revised: 5/24/2010 10:35:21 PM

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