11 Chapters
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6. The New Income Security

Ballard C. Campbell Indiana University Press ePub

I SEE ONE-THIRD of a nation ill-housed, ill-clad, ill-nourished.” That sobering observation was the keynote of Franklin Roosevelt’s second inaugural address in 1937. Despite the improvement in conditions during the first four years of the New Deal, the president admitted that millions of individuals still scratched out an existence “on incomes so meager that the pall of family disaster hangs over them day by day.” Most Americans in 1937 did not need a reminder that depression lingered in the land. But announcement of such widespread poverty seemed a contradiction in a country renowned for opportunity and plenty.

Difficult too for some to accept was the president’s recommendation that government should “provide enough for those who have too little.” Was it Washington’s obligation to assist people who were in need? Who would be eligible for public benefits? How much should they receive and for how long? These questions raised some of the most intractable policy issues in modern American history. In the eyes of some if not most people in the 1930s, financial help from government subverted time-honored reliance on individual initiative, private charity, and local responsibility. And if income assistance was accepted as a legitimate exercise of national authority, the thorny problems of who deserved help and what was an adequate level of support remained. The national government had begun to consider these issues several years before Roosevelt reported on poverty. During the next sixty years the United States constructed an array of economic security programs upon this foundation. Yet the polity never achieved a philosophic consensus about income inequality or government’s responsibility to ensure a decent standard of living for every individual.

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4. The Great Depression and Economic Policy

Ballard C. Campbell Indiana University Press ePub

PHOTOGRAPHS CAPTURED THE tragedy of the Great Depression. Bleak expressions of men slouched on park benches, small groups huddled around ashcan fires near closed factories, lines queued for blocks outside food kitchens, families with their belongings bundled onto ancient autos, shacks in the shadow of city skyscrapers. These poignant images are unmistakable signs of hard times in the 1930s. Yet the pictorial record only hints at the wounds the Depression caused. Survivors of these years remembered the frustration, humiliation, and despair. The trauma of joblessness immobilized some, who became recluses; others got on by stealing food and clothes and by adopting, one recounted, “a coyote mentality.” A few could not face the personal failure of unemployment or financial ruin and found a way out by suicide. Most Americans, however, chose less extreme remedies. They coped with hard times, as people generally do, by becoming cautious, tightening their belts financially, and postponing major decisions such as marriage and children. Many dreams of becoming a doctor, a scientist, a writer evaporated in the struggle to earn a living.1

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3. The Transition Era

Ballard C. Campbell Indiana University Press ePub

JULIAN WEST GAZED in amazement at his native Boston. It was not the city he remembered. Marvelous public structures adorned an immaculate landscape where hovels once stood. Doors were left unlocked because burglars no longer prowled the night; with “care and crime” abolished, thieves had vanished. The reconstruction of society had closed the chasm between the “wanton luxury” of the rich and the “general misery” of the masses. Now all members of a classless community shared equally in the nation’s expanded bounty. Who managed this utopia, Julian West asked? Government, his host replied. “The nation guarantees the nurture, education and comfortable maintenance of every citizen from the cradle to the grave.”1

This was Boston in the year 2000, more than a century after Julian West had fallen into a “mesmerized” sleep. The America he remembered had been torn by economic warfare, in which greedy entrepreneurs battled for financial survival. The winners of these wars had accumulated fortunes befitting royalty, but the cost of their victories was high. Economic titans had swallowed up competitors, allowing the control of industry to fall into “a few powerful hands.” In this “era of corporate tyranny,” many businesses transformed themselves into trusts and monopolies by forming syndicates and fixing prices. In this drive to crush rivals, corporate cutthroat competition had caused the “maim and slaughter” of workers and the waste of talent and resources. Capitalism of the Cleveland era thrived on the “brutal side of human nature.”

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1. Governing the Cleveland Era

Ballard C. Campbell Indiana University Press ePub

AMERICANS FACED A PERIL, Grover Cleveland warned in his annual message of 1887. This danger, the president continued, threatened widespread disaster and a “brood of evil consequences.” Phrased in such foreboding terms, the peril must have seemed formidable. The modern mind envisions horrors on the scale of a 9/11 attack or the unchecked spread of a virulent flu. But those were not the kind of hazards that Cleveland saw. His menace was surplus revenue, and the source of the problem was a tariff, which the president repudiated as a “vicious, inequitable, and illogical source of unnecessary taxation.”1

Viewed from our own time, Cleveland’s alarm seems quaint and a bit puzzling. Chronic deficits have been government’s normal way of operating since the 1930s. Modern critics complain about excessive spending and mounting debt. Cleveland fretted about government having a surplus of cash. He recognized that government had to collect some revenue, for no public regime can survive without a reliable income. Benjamin Franklin captured the essence of this truism long ago in his observation that “nothing is certain but death and taxes.”

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8. Paying for Modern Government

Ballard C. Campbell Indiana University Press ePub

MODERN AMERICANS GRUMBLE when they must add a dime or more sales tax to the cost of a doughnut and a cup of coffee. The approach of April 15, when income tax reports are due, can bring on apprehensions. Life in the Cleveland era had its annoyances too, but paying taxes was not one of them for most people. The average worker paid no direct levies to the government. The explanation for this astonishing situation lies in the way government used to raise its revenue. In the late 1800s the public sector levied two principal taxes—one on property and the other on imported goods. Of the two, only the property tax was levied directly on individuals and then principally on the owners of real estate. But most Americans in 1900 did not own a home or land. Roughly two-thirds of householders in the cities, where most workers lived, were renters. And a third of all farmers were tenants working and living on land they did not own. Property taxes applied to business property too, but only a small fraction of the workforce owned commercial real estate and most who did were also homeowners. Simple arithmetic shows that only a minority of Americans paid property taxes, the largest levy in the republican era.

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