Ely was brought up short by an attack on his job at Wisconsin in 1894, for allegedly preaching socialism and fomenting strikes. His colleagues rallied 'round and saved him. The University of Wisconsin still preens itself on its sterling defense of academic freedom. The University itself has indeed sheltered more than its share of outstanding independent thinkers like John R. Commons and Harold Groves; but the ebullient Christian Socialist in Ely was was broken forever, save for some residual sanctimonies. "... young Ely was 'tried' at the University for academic 'heresy.' After the trial, he carefully denied any connection between his social philosophy and that of Socialism" (Jaffe, p.108). A useful means to that end was to disparage Henry George, whom he had earlier labelled a "revolutionary" socialist.
There was a longer-standing reason for Ely's hostility to Henry George, in the person of Daniel Coit Gilman. In Ely's youth, even more than today, the way to promotion and pay was through a patron. Ely's patron was Gilman, expert exploiter of the Morrill Act (first for The Sheffield School at Yale, then at Berkeley), first President of the University of California, then first President of Johns Hopkins University, then first President of the Carnegie Institution. Gilman was a major founding and funding father of American higher education, and therefore necessarily something of a schemer, networker, and truckler to wealth - skills young Ely learned well. Gilman's network was tight, elitist, and mutually supportive, united by class consciousness; it was somewhat cabalistic, united by common Bismarckian graduate education, which was the height of academic fashion in that era, for those who could afford it. Gilman was the antithesis of George in many respects, which had led them into a major battle, as we will see.
Under Gilman, Hopkins became the first American university to specialize in graduate training. From 1876-92 it was virtually alone in turning out American Ph.D's in economics (Barber, 1988b, p.11), who in turn took over much of the future profession. Gilman's first hire at Hopkins in economics was Richard T. Ely, on the say-so of his close friend, Andrew Dickson White.
Gilman networked closely with fellow Yalie Andrew Dickson White, President of Cornell. Ely never went to Yale, but his career was pushed by as thick a club of old Elis as ever pirated beneath the Skull and Bones: White of Cornell, Gilman of Hopkins, Harper of Chicago (Ely, 1938, p.83), Barnard of Columbia (op. cit., p.56), and Dwight of Yale. White had discovered and patronized the young Ely in Germany, when White was on leave from Cornell in Germany as American Ambassador to Berlin, and Ely a student at Heidelberg under Bismarckian Karl Knies.
Gilman was on top of the Hopkins phenomenon. This was to give him enormous leverage over American education. No less than eleven Presidents of the American Economic Association were Hopkins Ph.D.s from Gilman's reign (Barber, p.224). Three other Presidents and founders had taught at Hopkins under Gilman: these were J.B. Clark, R.T. Ely, and Francis A. Walker. Carl C. Plehn, who dominated public finance in California, was an Ely product (Ely, 1938, p.115), one who maligned Henry George as naturally as he breathed. Woodrow Wilson was one of Ely's students (Ely, 1938, pp.108-19. Fortunately for the country, Wilson was later reeducated in New Jersey by George L. Record [Kerney]). Gilman had a long reach.
Enter the Henry George factor. Gilman had gotten to Hopkins because he had earlier been hounded from Berkeley in 1874-75 by a crusading populist journalist, Henry George. George, running the San Francisco Daily Evening Post, smelled corruption in Gilman's administration (Barker, pp.219-21; Cookingham, p.269-70). He also smelled elitism and improper diversion of Morrill Act ("agricultural and mechanical") funds to "classics and polite learning."
George spoke for the Grange, and some populist Republicans who joined with the Grange to form the Peoples' Independent ("Dolly Varden") Party. Together they made the Berkeley citadel too hot for Gilman, who resented it. It is true, the Establishment immediately gave him a new citadel at Hopkins, just founded by a baron of the B&O Railroad, and loaded with B&O Railroad shares. Still, it must have come as a nasty jolt when the frontier battler for vulgar farmers and mechanics followed Gilman back to his new realm and appeared on the sophisticated Eastern scene as, of all things, a major intellect. This is something Gilman, the networker and administrator, never was nor could be.
Worse, George embarrassed Gilman's friend Francis A. Walker in intellectual combat on Walker's own ground (the U.S. Census). Gilman's feeling toward George would naturally be aped by the upwardly mobile protege, R.T. Ely. Ely's autobiography (1938), 50 years after Ely had left Hopkins, is dedicated to the memory of Gilman, "under whom I had the good fortune to begin my career, and to whom I owe an inestimable debt of gratitude."
Gilman controlled Ely, in part, by playing him off against a rival, Simon Newcomb. To win points with President Gilman, Ely in 1885 followed Gilman's behest to found a professional association: The American Economic Association (Coats, p.354). To do so he enlisted the help of Francis A. Walker (Barber, p.216-17; Coats, p.352, 360-62). (J.B. Clark, E.R.A. Seligman, and Andrew D. White were also founders (Ely, 1938, p.179).) Thus, the two most influential men in Ely's early career were both embittered personal adversaries of Henry George: men whom George had met head-on, bested, embarrassed and damaged. A third one, Andrew Dickson White, we have met at Cornell (see Alvin S. Johnson).
To them we should add Abram S. Hewitt. Hewitt was the New York patrician who in 1886 allied with Tammany and the Catholic hierarchy to block Henry George's bid to be Mayor of New York City (Barker, pp.453-81). Hewitt was an early financial angel to Ely's new Association. "Need I say that the gentleman holds a warm place in my heart?" (Ely, 1938, pp.138-39). The pathway to Ely's heart was definitely through his purse. The same might be said of many others, it is true; but how different would the A.E.A. look and act today if purses like Hewitt's had been open to George instead of Ely?
Hewitt's character may be estimated by the methods he used to steal the election of 1886: "... corruption and fraud. ... all of the ignoble and subterranean devices of criminal politics ... Tammany repeaters ... fraudulent votes ... tampering with the election returns and misrepresenting them ... " (Myers, 1907, pp.357-58. Myers was an expert on Tammany, as author of The History of Tammany Hall). As to Hewitt's trade, he was an "ironmaster". As to his social philosophy, "The problem presented to systems of religion and schemes of government" is to make men who are equal in liberty content with inequality in property (Goldman, p.71).
Recall the case of Seth Low, who brought J.B. Clark to Columbia. It is noteworthy that both Hewitt and Low, George's major political blockers, were wealthy patrons of NCE. Among the lot, and with J.B. Clark, and the wealthy Andrew Dickson White (Ely, 1938, p.57) and the wealthy E.R.A. Seligman, they founded the most influential, controlling professional association of economists. Walker was President, and Ely Secretary, for the first seven years, time to bend the twig firmly in their direction.
An undemocratic "Council" controlled the early Association, "to prevent our organization from being captured by some economic sect or group of reformers" (Ely, 1938, p.162). The main group answering that coded description in 1886 was the single-tax "economic sect or group of reformers," then at a cyclical peak of vitality and widespread support. Non-reformers, apparently, were acceptable. "Businessmen" were entirely welcome; "historians" were numerous (ibid, p.179).
Yet another factor may have been professional jealousy. Ely was highly competitive, shown by his strife with Newcomb at Hopkins. This side of Ely also surfaced in his intemperate outburst at successful rival author Thorstein Veblen - the outburst that forced Grace Jaffe to leave his employ (Jaffe, p.113). Before the catharsis of 1894, Ely was considered something of a liberal (in the German meaning). In 1886 he published The Labour Movement in America, hoping to take some leadership of this movement, and steal a march on Newcomb at Hopkins (Barber, p.219). It made little impact outside the profession. Ely dominated economic teaching in the Chautauqua circuit (he was a native of that County), and prided himself on large sales of his texts. In the same decade, sales of George's books were in the millions: Progress and Poverty, Social Problems, The Irish Land Question, and Protection or Free Trade? were all best-sellers, and the talk of the labour movement, which supported George warmly. Ely dropped the names of Samuel Gompers and Terence Powderly, but these were among George's organizers and supporters in the 1886 election.
George was a successful lecturer and orator. His spellbinding skill, combined with genuine warmth and exciting message, brought crowds to life: he worked them with relish. Ely rated himself poorly as a public speaker, referring often to his wooden platform performances and chilly receptions (1938, passim). He was not modest about other achievements, so his word on this seems credible. George, the ex-journalist, also sensed the pulse of the reading public better. In 1886, with the Haymarket riots and bombing, the public was about to turn against organized labour. George never did that, but 1886 was the year when George published Protection or Free Trade?, picking up the incoming buzzword just as the old was losing favor, and Ely was getting around to using it. If Ely was to beat George, it would have to be in Ely's privileged sanctuary, the academy, safely sheltered behind walls green-ivied with funds from rent-takers.
Last, Ely was methodologically a Bismarckian, like J.B. Clark, totally converted by the man he called his "master," Karl Knies of Heidelberg. Is it fair to assume that Knies was "Bismarckian"? Much is said in praise of German university life in this era, but Ely notes, "Public authorities minutely prescribed requirements for these (professional entry) examinations. In this way they controlled the university courses" (Ely, 1938, pp.53-54). "... they developed their economics out of German life, and the German professors were part of this life. ... the universities were largely institutions designed to train men for the civil service ... " (op. cit., p.187).
Bismarck was a Prussian before he was a German, and a Junker before he was a Prussian. He was author of the Kulturkampf, a form of thought control. He controlled every aspect of German life, with the most efficient civil service and secret police in the world. It is inconceivable he would have tolerated teachings inimical to his Junker class interest. Unvexed by such problems, or even by Adolf Hitler, Ely reaffirmed in 1938 an earlier recommendation "for the state by proper legislation to raise the standard of requirements and so assist the colleges and universities in giving us an able and properly educated set of professional men as in Germany" (Ely, 1938, p.54). He published this in the year of Munich. When it came to totalitarians, Ely was a slow learner. He shared this problem with another famous battler against land taxation, Neville Chamberlain (Douglas, pp.206 ff.; Geiger, 1933, p.419).
George was in the English classic tradition, which Ely was trying to root out of the profession. Ely was engaged in a delicate balancing act: promoting Bismarckian socialism, safely protective of rent-taking (bolstered by protectionism), while deflecting attacks from those who might confuse this with distributive socialism (Coats, pp.357, 364). What better way than to attack George? George favored distributive socialism (via land taxation) without Bismarckian paternalism, and without subsidizing and manipulating public works to enrich land speculators like Ely. Ely wrote a chapter on "Henry George and the Beginnings of Revolutionary Socialism in the United States" (Ely, 1885, cit. Young, p.94; emphasis mine). The tactic was to distinguish Ely's Bismarckian socialism, safely controlled by the establishment, from George's distributive proposal which he tars as "revolutionary."
Later, Kaiser Wilhelm II was to make Ely's balancing act even trickier: the Kaiser's arrogance, unpopularity, sword-brandishing, and finally World War I, took the cachet off Ely's German training that had given him his original edge in academe. After 1900, American students stopped training in Germany, while Georgist native radicalism burgeoned. Putting it all together, there were many motives for Ely to preach and intrigue against George: enough and to spare.
By 1920, Ely was 66. He was staring at mandatory retirement, and not ready for it. His vital signs were strong: when admonished by a friend for "chasing girls" at his age, he answered, "Do you want me to commit suicide?" (Jaffe, p.109). He was to live 23 more years, and presently to sire two more children with a young Northwestern athlete, Margaret Hale Hahn (Ely, 1938, p.250). He began a new career, founding The Institute for Research in Land and Public Utility Economics. It was more than a new career, he founded a new field, "land economics." This much is admirable and simpatico: he refused to vegetate and die on schedule. He was a pioneer against age discrimination, at least for himself. Few men found new fields at any age, let alone after mandatory retirement. His achievement was brilliant and outstanding. However, the tale of Faust comes to mind. He had to raise private funding; there was The Devil to pay. Ely apparently chose the "pay-as-you-go plan."
The Mitchell Palmer Raids of 1919-20 signalled a watershed in American history, a replay of 1886 (Post, 1923). The 1920 turn was from Progressivism to reaction, suppression of labour, class warfare, the Ku Klux Klan, J. Edgar Hoover, lower real wages, reneging on promised veterans' benefits, soaring capital gains in land and stocks, and growing inequality. This time, Ely called the turn, right on the mark. In the new era of Babbittry Ascendant, Ely's anti-Georgism reached its peak. He used it to raise funds for his Institute.
His fund-raising appeals may be inferred from the following, from a 1923 address to the American Railway Development Association (cit. Jorgensen, p.18):
"One topic that I have mentioned is taxation of Land and Public Utilities. ... it was an official of one of our railways, Mr. W.W. Baldwin, Vice-President of the CB&Q Railroad Company, who suggested the importance of this special topic and induced the Burlington Railroad to make subscription to our funds. He said that the land and the railways are in much the same situation, and he felt that this was a topic that could well engage our attention. Both are tangible, easily reached and are in no position to escape taxation by flight ... The taxes paid by the railways run into hundreds of millions per year, and their interest in our taxation work must be very great."
" ... we have received endorsement and subscriptions from ... the Great Northern; the Northern Pacific; the Baltimore and Ohio; the Atlantic Coast Line; the Nickel Plate Road; the Chicago and Northwestern; Chicago, Burlington, and Quincy; the Illinois Central; the Minneapolis, St. Paul and Sault Ste. Marie; and the Chicago, St. Paul, Minneapolis and Omaha."
Ipse dixit. One might add that land and the railways are not just "in much the same situation," they are much the same, full stop. Ever since the legendary land-grants of the 19th Century, railway companies had been the largest landowners: rural, urban, sylvan, and mineral. 10% of the land in the City of Chicago was in railyards, much of it adjacent to The Loop (the Chicago CBD) itself. Rights of way and terminal and docking sites were, as they remain, the rails' major asset.
"Public Utilities" as part of the Ely Institute's name was a euphemism for the unpopular, highly suspect railway corporations (Ely, 1938, p.238, lines 1-4). This was the age of Hiram Johnson and Robert La Follette. Railways in turn were surrogates for land companies. George, an old battler against Leland Stanford, had been the first to document the extent of, and assail these land grants (1871). His followers were proposing, in the Ralston-Nolan Bill of 1920 (H.R. 12,397), to include them in the land tax base. In the Georgist literature, "franchises" are consistently included with "land" in the proposed tax base. Urban mass transit firms were particularly targeted at that time.
Later, Ely the autobiographer volunteers that he was getting funding from various rail and utility magnates: "President Willard of the Baltimore and Ohio Railroad, and Owen D. Young, ... and others like them, including George B. Cortelyou ..." He assures us, though, that "money which comes to us must be free from any restrictions ..." He praises one Albert Shaw, "who stands shoulder to shoulder with me," whose commitment is to "stating facts, even if they should happen to be facts which seem to be favorable to big business" (1938, p.264).
The young Ely had seen merit in public ownership of utilities (Ely, 1938, p.160). Ely the fundraiser for the Institute turned about. For this "one-eighty" he took bitter words, and in his apologia justifies himself. He illustrates the weakness of regulation in this interesting, perhaps autobiographical way. "Perhaps I am a college professor and the street-car magnate whose rapacity I am called upon to help hold in check has endowed the chair which I occupy. Is it strange that many of us who are called upon to control others of us should simply refuse to do it?" (1938, p.253). His harshest critic could hardly have written anything nastier than that, but in his dotage that apparently persuaded him, at least.
He turned against public ownership because "The great mass of the people are interested in games - baseball, movies, radio, and football" (1938, p.260). As to this, Upton Sinclair made a good point. "The student comes to college full of eagerness and hope, and he finds it dull. He has no idea why ... men should be fired if they prove to be anything but dull. All he sees is the dullness, and he hates it, and 'cuts' it as much as he can, and goes off to practice football or get drunk" (Sinclair, p.61). The whole thing is rather circular. The magnate stifles the professor, the professor bores the students, the students get drunk and get blamed for the whole mess.
Hibbard (1921) also reminded the "utilities" that they would be taxed under the Ralston-Nolan Bill. According to Ely, his major contributors were utilities, railways, building and loan associations, land companies, lumbermen, farmers, bankers, lawyers, insurance men, ... and libraries" (Ely, Institute News, October, 1924). We may surmise that the libraries' contributions were not the backbone of the operation.
Ely had not previously published anything on land or resources; there hardly was such a "field" (Ely, 1927, p.119). However, he had an old book on local taxation (1888), a big name, and wealthy, motivated clients in the wings. He had an acceptable track record of belittling Henry George (Ely 1885, 1886, 1915). He incorporated his Institute but arranged to use space at the otherwise state-funded and controlled University of Wisconsin at Madison (Jorgensen, p.13). The Institute was not part of U.W. (Ely, 1938, p.247), but used its name.
Ely's Institute marked a new salient in the anti-Georgist campaigns. Ely did not rely, like Clark, on removing "land" from the lexicon of economese: "land" was in his new name. That did not stop him from denying that land has unique qualities, but his strategy was rather to preempt the work of those more applied economists - farm economists, real estate sellers, valuers, lenders, urban economists, resource economists, transportation and public utility economists - who hadn't learned better than to use four-letter words like "land." He guided them away from ideas that might lead to taxing it, and used their money to guide others away.
Ever since, the economics profession has been poised on the balance of wonderful ambivalence. Official Clarkian theory says there is no such thing as land, but just in case there is, it is to be studied under the guidance of Ely, founder of the AEA, in a separate, watertight compartment. Ely isn't so sure there is such a thing as land either, but whatever it is, it must be treated as private property, and taxed only nominally if at all.
The Institute motto, "Under All the Land," is the same as that of The National Association of Real Estate Boards (NAREB). The clientele of the Institute was "courts, legislators, administrative officials, public utility executives, real estate dealers and owners, ... " (1938, p.238; my emphasis). "Banks, insurance companies, and lending institutions" that had foreclosed became a major concern (op. cit., p.243, my emphasis). Their evictees (like John Steinbeck's Joad family), would-be buyers, renters, the job-needy, employees, students, voters, concerned citizens, the average intelligent adult, and the general public are not mentioned. The announced goal of the new Institute was to investigate "all the problems connected with land and taxation" (Jorgensen, p.iv; Ely, 1938, p.240). Ely appealed for funds "for researches urgently demanded in the public interest, including the taxation of land" ("Organization and Purpose of the Institute for Research in Land Economics and Public Utilities," p.8).
He defined his field this way. "Property and value mark out the field of land economics and separate it from those sciences which treat of land with reference to its productive powers ... " (1927, p.121). "The scope of land economics is as large as that of property rights in land and natural resources. One of the first marks of civilization is the definite allotment of specific rights in the gifts of nature" (1938, p.235). Elsewhere in this series this writer has itemized ten attributes that distinguish land from capital and labour, and nineteen major economic consequences thereof. Ely's work on land, however, focuses only on land as property, and land as having private value. One might suspect he is rationalizing both of those, and leaving out everything else. He is faithfully replicated today by the private property fundamentalists of our times, Coasians, et hoc genus omne, whose panacea is to make every natural resource private property, then punt. They market their creed as "the new resource economics." Perhaps they have some claim to novelty, they are more extreme than Ely, who did favor residual social controls over land use, and at least had some history of social consciousness. However, even Ely didn't invent this. In 19th Century England it was called "free trade in land" (George, 1879, pp. 321-22; Douglas, p.18; Lawrence, pp.97,105).
Ely's Institute's first output (Hibbard, 1921) was an overtly political attack on the Ralston-Nolan Bill (H.R. 12,397). Drafted by Jackson H. Ralston, Ralston-Nolan would impose a "1% excise tax on the privilege of holding lands, natural resources and public franchises valued at more than $10,000, after deducting all improvements" (Jorgensen, pp.8-9, 73). The National Association of Real Estate Boards (NAREB), a major contributor to Ely's Institute (Jorgensen, p.6, n.7), published and distributed Hibbard's hit-piece nationwide, using the name of Ely's Institute for academic cover. Emil Jorgensen flayed Ely for presenting this as a product of an "Institute for Research," before any research was done. Ely lamely defended himself, belatedly, that "We have never advocated panaceas" (1938, p.239, 241). The relevance of that is only clear if one understands that "panacea" is code language for single-tax. E.M. Fisher, a member of Ely's staff, soon joined NAREB as Assistant Executive Secretary, to take charge of its "educational" work (Institute News, June, 1923).
Later the Institute was to follow up by attacking the Bill's successor, the Keller Bill of 1924 (H.R. 5733). In this case the attack was by Ely himself, read into the Congressional Record (pp. 3092-93) by Congressman Ogden Mills of New York. Mills, a multi-millionaire, dominated the key Committee on Ways and Means, and was to succeed Andrew Mellon as Hoover's Secretary of the Treasury. Mills, with Ely's help, was to kill Keller in committee (Jorgensen, pp.78-81).