[1] Patten later brought Scott Nearing to Pennsylvania, and encouraged other Progressives there. I cannot say if this means he was inconsistent, or inefficient, or genuinely tolerant, or a late convert to the single-tax. What is certain is that he bent his own academic work to accommodate the protectionist views and interests of his employers at Wharton School of Business.
[2] Actually, Ely gradually shifted after 1893 from a classical definition of capital, limiting it to "products," to a Clarkian definition including land with capital (Fetter, 1927: 154). The shift was gliding and marked by ambiguities, which we will see is characteristic of Ely.
[3] This is also called "the excess burden of indirect taxation," "the excise tax effect," and various epithets.
[4] Laffer's invocation of George was, alas, opportunistic. When the chips were down, Laffer fully supported Prop. 13 in California in 1978. He refused to acknowledge that half of the California property tax base consisted of land value.
[5] Reagan-Bush tax policies actually withdrew preferential treatment from new investing and lowered rates on unearned income from land, while raising rates on payrolls.
[6] "Trust no future, howe'er pleasant; let the dead past bury its dead. Act, act, in the living present, heart within and God o'erhead!"
[7] Few recognized it at the time. A notable who did was Jacob Stockfisch, 1956, who, however, viewed it negatively. Stockfisch was a student of Earl Roiph, who had absorbed his Clark, Knight, and Seligman thoroughly. Stockfisch was a close associate of William Niskanen, adviser to President Ronald Reagan, and now head of the libertarian Cato Foundation. Another student ofRolph was George Break, whose student in turn was Michael Boskin, Chair of President George Bush's Council of Economic Advisers, where he crusaded to lower tax rates on unearned increments to land prices. Thus the lineage proceeds, generation to generation.
[8] A long collection of dismal quotes from Alan Greenspan, Paul Samuelson, Henry Wallich, Otto Eckstein, Milton Friedman, and Arthur Okun is assembled in M. Gaffney, 1976: 101; and M. Gaffhey, 1977: 58.
[9] Such, for example, is the misleading implication of the now standard and generally excellent biography by Charles A. Barker.
[10] Pacifists might question including the war years in the Georgist period, but consider this. Newton D. Baker, former single-tax Mayor of Cleveland, Ohio, was made Secretary of War. Under him the US had the most impartial, democratic draft policy we have ever known: no one could buy his way out. Baker's policies contrast with the neo-classical ideal of a mercenary army, articulated by Milton Friedman. Consider also that the original income tax details were forged by Georgists like Congressmen Warren Worth Bailey and Henry George, Jr. Rates during the war were set high enough so we paid for the war without borrowing as much as any of the other powers, and we did it without taxing labor income more than trivially. Consider also that in 1917, for the first time, the US Treasury sold bonds directly to the public, cutting out the Morgan-Seligman cartel of middlemen.
[11] The first income tax legislation, passed by Congress in 1916, was crafted by Congressman Warren Worth Bailey, single-tax publisher from Johnstown, Pennsylvania. It exempted almost all wage and salary income. One of his many allies was Congressman Henry George, Jr. (D-Brooklyn). The story is told in W. Elliot Brownlee, 1985, "Wilson and financing the Modern State: The Revenue Act of 1916," Proceedings of the American Philosophical Society 129(2):173-210.
[12] Congressman John I. Nolan of California introduced it in Congress on February 7, 1920 (H.R. 12,397). Note how its drafters copied the legal logic of the corporation income tax, rather than using the 16th Amendment.
[13] Zangerle and Somers worked in Cleveland; Purdy in New York City; Babcock in Chicago.
[14] The French signalize this in their inimitable style. They give two meanings to the verb percevoir: to perceive, and to tax.
[15] Nothing could be more ironic than this happening in a State whose capitol is named for the Junker Otto von Bismarck. We see below how Bismarck's educational apparatus helped give NCE its anti-Georgist orientation.
[16] Two excellent works on the venality and tyranny of college trustees and administrators during this period are Sinclair, 1923, and Veblen, 1918. Several more such works are needed today. Most academics could, if they had the will and the insight, write them from their own careers.
[17] For example, Elizabeth Dilling, a leading alarmist of the l930s, includes the following prominent Georgists and quasi-Georgists as members of "the red network": Wm. S. U'Ren; Frederic C. Howe; Newton D. Baker; Benj. C. Marsh; Upton Sinclair; Louis D. Brandeis; Louis F. Post; John Dewey; Philip Snowden; J. C. Wedgwood; "Mr. Asquith"; Sun Yat Sen; Carrie Chapman Catt; Jackson Ralston; Warren S. Blauvelt; Geo. H. Duncan; Alice Thatcher Post; Herbert Quick; National Popular Govt. League; People's Lobby; Harry Laidler; Otto Cullman; F.C. Leubuscher; Broadus Mitchell; Clarence Darrow; John S. Codman; John R. Commons; John Ise; and Helen Swift Neilson (Dilling, 1934). My father, a moderately liberal school superintendant, had to regulate his public life carefully to forefend Mrs. Dilling's fatal finger. It could cost one his job, and might have when she named him in the pages of the Chicago Herald-Examiner. One of his faculty, a free-spirited English teacher had assigned The Communist Manifesto to a class including her son, Kirkpatrick. Such unwelcome attentions intimidate many more than those actually named.
[18] The writer has documented this in Gaffney 1970, 1971, and 1993.
[19] This does raise another concern, whether such effects might lower the value of land as a tax base. It would be biased to debit George on this point, without crediting him for the equity and efficiency gains that lead to it. Still, it must be addressed, and we do so in a forthcoming CIT volume (Private Property and Public Finance).
[20] George Gilder (getting a little carried away) even writes that human intelligence is now the only limiting resource, and resource constraints are an obsolete notion.
[21] They called him "The Prophet of San Francisco". He turned out to be the prophet of Los Angeles - its riots and arson, that is.
[22] Leon Walras impugned the character and motives of conservative economists of the French establishment, especially Bastiat, more savagely than ever Henry George impugned his targets, and for the same reasons. It is an interesting question why Leon was forgiven, and George was not. It is probably because Leon, like Mill, pulled his punches: he proposed compensating landowners before taxing them. One may insult the hired help so long as one does not threaten the existing maldistribution of wealth.
[23] Fred Foldvary coined this apt term recently. See his contribution to Land and Taxation (Editor: Nicolaus Tideman), London: Shepheard-Walwyn/CIT, 1994
[24] Post was also the author of Labor Day, and Assistant Secretary of Labor, 1913-20. He was to conduct an heroic rear-guard action against the stampede engineered by Mitchell Palmer and J. Edgar Hoover to deport US labor leaders.
[25] Before that Butler was Dean of the Faculty of Philosophy. I surmise that my original source, a careful scholar, has a basis for the statement, and the error is only a detail. Wall Street, New York city, and Columbia University had interlocking directorates.
[26] Concerning the political ambitions, machinations, connections, and low academic productivity of Butler see Sinclair, 1923, Chaps. I-XIII. Sinclair conceived his low opinion of higher education as a student at Columbia.
[27] Figures are from E.R.A. Seligman's introduction of the man he ribbed familiarly as his "benevolent despot," N.M. Butler, at a banquet in honor of J.B. Clark. Apparently he had lost the exact count.
[28] Dartmouth College v. Woodward, 4 Wheat. 518 (1819).
[29] George and Georgists regarded franchises as forms of landownership, and would subject them, like all lands, to heavy taxation. They rather quickly worked out what is now called the principle of marginal-cost pricing for decreasing-cost services, and would regulate fares at low levels, where appropriate, making up the fare-box deficit through land taxation. Cleveland's mass transit applied this system under Georgist Mayor Tom L. Johnson, 1901-10; New York City kept its subway fare at 5 cents for decades under this system. The brilliant economist Harold Hotelling rather timidly formalized this concept in 1938. Kenneth Arrow (1987) characterizes his position as "market socialism," but that is a blind spot: it is pure Georgism, restated afterthe fact for the Econometric Society.
[30] Some notable cases were the firing of Edward W. Bemis from Chicago, for speaking out for the strikers in the Pullman case, offending a potential donor, the head of the Chicago and Northwestern Railroad (Barber, 1988: 252-53); the dismissal of Edward A. Ross from Stanford for advocating public power and transit; the dismissal of Veblen in 1909. The overt domination of Stanford by Leland's widow, Jane Stanford, was notorious (Cookingham, 1988: 280-89; Sinclair, 1923: 152-68). Mrs. Stanford at one point put the Stanford faculty on her payroll as personal servants. It was an infighting maneuver among rival robber barons, but an accurate statement of the faculty's status. Leland and Jane Stanford had originally founded their university on the advice of a medium hired to communicate with the ghost of their deceased only child (Wallace, 1905).
[31] The scenario fits almost exactly Ibsen's An Enemy of the People.
[32] Nearing told Upton Sinclair that he commanded larger and more interesting audiences after the Pennsylvania dismissal (Sinclair, 1923: 449). In 1922 Nearing was still so dangerous that the President of Clark University interrupted and closed a visiting lecture he was giving to a student club, literally ordering the lights put out. On this occasion his offense was quoting from Veblen on The Higher Education in America (Sinclair: 296-97).
[33] This much is from family lore (Clarke was my great-uncle). Professor John Henry (1992: 16, n.11) believes that threats to religion were seen as threats to property. I am not at all persuaded of this, considering the uses to which Darwinism was put by Spencer, Huxley, Sumner, et al. Clarke himself was a Roosevelt Republican, perhaps slightly to the right of J.B. Clark, a Cleveland Democrat.
[34] There was little reason to suspect Ely of anything but loyalty to rent-takers, as we will see below.
[35] Professor Henry's works on Clark are stimulating and well-researched. We maintain a long, friendly correspondence. Our differences stem, I believe, from the domination of modern radical scholarship by those who overestimate the role of Marx.
[36] Frank Knight, 1946. The profession took this nonsense with all gravity. A Committee of the American Economic Association (Bernard Haley and William Feliner) laid on its hands by selecting this article for reprinting in its Readings in the Theory of Income Distribution, 1951: 384-417.
[37] J. and W. Seligman Brothers had a lock on a fixed share of the distribution of US Treasury bonds, along with Belmont, Rothschild, and Morgan. In 1917 the Treasury cut out the middlemen, with no apparent loss of efficiency (Myers, 1907: 560, n.10).
[38] This is laid between the lines, as absurd points must be to get by, but it is central to the argument he makes. What he says is that a tax on housing will drive capital out of housing unless land is also taxed, which will drive it back into housing. Uniformity is thus what makes taxes neutral. The corollary is that to tax land and not capital would drive too much capital out of land and into housing.
[39] McLure, then a Treasury official, gave intellectual guidance. Politically, the leaders were Congressman Daniel Rostenkowski, Chair of the House Committee on Ways and Means, and Senator Robert Packwood, head of the Senate Finance Committee. Both of the last two later achieved notoriety on other grounds. The power of those who write tax laws has led others into temptation before (like Andrew Mellon and Wilbur Mills, each in his own way).
[40] Seligman repeats this point verbatim through 10 or more editions of Essays in Taxation, Chap. III, sect. 4. He really means it. The original phrasing actually came from Charles Spahr (1891: 632).
[41] George had given most ofhis emphasis to the extensive margin ofproduction. Critics of the "any-stick-to-beat-Henry-George" school accuse him of overlooking the intensive margin, but a careful reading of George shows otherwise. E.g. he writes that when wages fall, labor resorts "... to inferior lands, or to inferior points on the same lands ... " (1879: 169). This phraseology, repeated elsewhere, clearly refers to an intensive as well as an extensive margin.
[42] George Stigler exhumed them in 1969, J. of Law and Economics 12:181-226. The itch to giggle at the ghost of George continues to run high, even among those who insist he is inconsequential and forgotten.
[43] A Lorenz Curve is simply information organized in this manner: the top 4% of the landowners have 53% of the land, etc.
[44] Ely refers only to "Mr. Sage". This would be Henry W. Sage, a resident of Ithaca who made a fortune speculating in western timberlands. By coincidence the better-known Russell Sage was, with Ezra Cornell, a major Western Union stockholder.
[45] Ezra Cornell was guaranteed a 7% return on his investment before the College got its share (Gates, 1943: 35-36, 56-57). Gates, a Cornell historian, hints vaguely that E.C. may have pocketed more than he should (p.58). Sometimes he did not pay for the scrip up front. Those, however, are only incidental suspicions.
[46] There are no adequate sources on this neglected era, but some usable ones are: Young, 1916; Miller, ca. 1919; Fillebrown, Ca. 1901-20; Whitlock, 1925; Steffens, 1931; Geiger, 1933: 381-478; and Fels. Brownlee, 1985, is very good on its limited topic. Historians have focused excessively on George the person, to the neglect of the movement that throve for twenty-five years following his death.
[47] This strange locution is repeated verbatim in Fetter, 1933: 149.
[48] Genealogical evidence suggests that Ely was distantly related to the present writer: his mother was Harriet Mason from Massachusetts. His works resonate with simpatico old New England verities. We also share common backgrounds in western New York, Wisconsin, Chicago's North Shore, and the study of land economics. My father, like Ely, studied at Heidelberg. So much sadder the regret at our differences, which are deep.
[49] Gilman and White had remarkably parallel careers. They went to Yale together; they overlapped at the University of Berlin (Barber, 1988: 210); they were attaches together in the US Embassy at St. Petersburg (New Columbia Encyclopedia); they exploited the Morrill Act together. White engineered Gilman's appointment at Hopkins, patronized Ely in Berlin, and then placed Ely withGilman (Barber, 1988: 210). Later he helped Ely found the American Economic Association, although White was an historian. Another ally was Timothy Dwight, President of Yale. Many tracks lead back to Yale. Something ambitious was stirring there: this is the same Yale generation that took over the lands of Hawaii in the name of Christian conversion. To these Yale divines, Skull and Bones was more than a club, it was an ensign. Conspiracy theorists revel in the "secret society" Skull and Bones connections. This writer lacks the expertise to form any opinion on this "spooky" aspect, and finds Sutton's (1983) treatment too disjointed, even though provocative and often factual. Sutton also seems to mysticize what is more obviously explained as common class interest and clubbiness. For whatever reasons, the community of academic economists was thick as thieves.
[50] In 1888 he had written tolerantly, even favorably of the results of early Ohio experience with focusing the property tax on land value (1888: 135, cit. Ralston, 1931: 155). "Ely changed his economic views upon making a fortune as a land speculator" (Ralston: 156).
[51] Jackson H. Ralston wrote The Law and Procedure of International Tribunals (1926, Stanford University Press), based on his experience in the field. He was also attorney for the American Federation of Labor for 26 years. After 1928 until retirement he lectured at Stanford on International Arbitration
[52] Jackson Ralston was later a Judge, and visiting Law Professor at Stanford. He was the leader of various single-tax campaigns in California. Congressman John I. Nolan of California introduced the present Bill in Congress on February 7, 1920 (H.R. 12,397). Note how its drafters copied the legal logic of the corporation income tax, rather than using the 16th Amendment.
[53] Data to test and refute this lay in 1923 income tax returns. In 1923 and 1924 Congress made this information public, for the first and last time. Jorgensen uses it effectively to refute Ely, citing the Report of the Secretary of the Treasury, 1923: 11 (Jorgensen, 1925: 76).
[54] "Colonization company" was at that time a euphemism for a land speculator.
[55] Lowden' s stature was such that in 1924 he declined the Republican nomination for vice-President - he evidently thought he should head the ticket. Lowden contested Hoover for the 1928 Republican nomination. Their main difference was that Lowden favored subsidies for farm landowners (Hicks, 1960: 201-202).
[56] These included some of my ancestors, but that was long ago and has played only a minor role in forming my biases, such as they may appear to the reader. My Irish grandfather was a militant Fenian in the late 1 860s, joining in the abortive invasion of Ontario by Irish-American veterans of the Civil War. However, he soon repudiated the leadership of that fiasco, and ended his career as a puritanical Presbyterian clergyman in upstate New York. In any event he died in 1911, well before my birth.
[57] This seems inconsistent with the denial that interpersonal comparisons are valid, but untangling Edgeworth is a full career that I will not enter.
[58] Better yet, let the reader consult Pareto's books and articles. The Manual: 349 ff., consists of disjointed misanthropic ravings. Pareto, 1893, is totally cynical and nihilistic, with no constructive end in view.
[59] The unwary modem reader might assume this to refer to Tolstoy's pacifism, but Pareto himself was an anti-militarist. The context of these remarks is opposition to leveling and redistribution of wealth. Pareto favored the use of force internally, to maintain the unequal distribution of wealth. He opposed almost everything else done by governments, including international war. This is consistent with his anti-leveling spirit. International wars generally result in stronger community feelings and higher taxes. George himself was not a pacifist, but a supporter of Lincoln. He also volunteered in an abortive venture to back Juarez against Maximilian in 1865 (Barker, 1955: 70).
[60] J.M. Clark was probably a good and moderating influence on J.B. Clark, all in all, but J.B. Clark was still the dominant influence on J.M. Clark: father, teacher, dissertation chair, and finally predecessor in the chair J.M. Clark got at Columbia.
[61] To repeat and remind, Clark and Knight could not abide Austrian capital theory because it distinguished land from capital by stressing that each item of capital has a period of investment from birth to exhaustion.
[62] This is a stylized "production function" in which output is an instantaneous function of labor and capital, each described as a quantity at a point in time.
[63] This is in the oral tradition. It was told me years ago by Dr. Walter Chryst, a Brown student, now deceased. I believe the writer was King. I have not confirmed it otherwise.
[64] I have not researched whether this is original with Plehn. Whoever did originate it, it surely has become a major point of rent-takers in our times.