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PETERS & SON, TYPOGRAPHERS. PREFACE, This volume is written chiefly for the instruc- tion of the instructed classes. The conclusions reached respecting the present distribution of property and incomes are in the main those which common observation has forced upon thoughtful men and women in the ordinary walks of life. The writer has learned, and hopes to teach, that, upon matters coming within its field, the common observation of common people is more trustworthy than the statistical investigations of the most unprejudiced experts. Indeed he has come to believe that social statistics are only trustworthy when they show to the world at large what common observation shows to those per- sonally familiar with the conditions described. CHAELBS B. SPAHR. CONTENTS. PART I. The Distribution of Property. CH.U>TBK PAGE I. English Ebtkospect. The Tendency TOWARD Concentration 3 11. American Retrospect. The Old Section- alism AND THE New 24 III. The Present Situation. The Distribution OF Property by Classes 50 PART II. The Distribution of Incomes. IV. European Incomes. The Shares of Labor AND Capital 73 v. The Nation's Income. The Recent His- tory of Wages 95 VI. The Present Situation. The Distribu- tion OP Incomes by Classes 119 PART III. The Distribution of Taxes. VII. National Taxation. The Injustice of Indirect Taxes 133 VIII. Local Taxation. The Justice of the Property Tax 146 vii Till CONTENTS. APPENDICES. APPENDIX PAGE i. dlstkibution op incomes in england and Wales in 1688 161 II. Eetukns in New Domesday Book fob 1875, 162 III. Mb. Giffin's Akgument 163 IV. The Minimum Debt of the United States, 1890 168 V. Foreign Holdings of Ameeican Wealth . 169 VI. Income op the United Kingdom in 1885 . 170 VII. Schedule D and E of English Tax Ke- TUKNS 172 VIU. Taxation in Basel in 1429 174 IX. Personal Estates in Baltimore .... 175 X. Inventoried Estates in Massachusetts . 176 INDEX 181 PART I. THE DISTRIBUTION OF PBOPEBTT. PART I. THE DISTRIBUTION OF PROPERTY. CHAPTER I. ENGLISH RETEOSPECT. — THE TENDENCY TOWABD CONCENTRATION. Thbkb has been a strong tendency toward tlie concentration of wealth. This tendency, however, has had nothing of the nature of natural law. There is no more evidence of an National Conscience "iron law of wages," keeping the labor- not Natural ers down to an "existence minimum," ^^'^ ' Control. than there is of a pampering providence reducing the wages of capital and increasing the wages of labor, no matter what the endeavor of cap- italists or the listlessness of laborers. The distribu- tion of wealth is under the direct control of laws for which the national conscience is responsible ; and the distribution of wealth has become better or worse precisely as the national conscience has been directed to, or directed from, the laws controlling it.^ 1 Mill Is hardly overstating the case when he declares (Bk. II., chap, i., sec. 1) that the distribution of wealth is " a matter of human institution solely." 3 4 TBE DISTMIBUTION OF PROPERTY. In eveiy age conflicting forces are at work. That those making for a greater inequality of fortunes have, on the whole, been domi- ""Forces"^ uaut is accepted by the general public Always at bccausc it couf omis with the common observation respecting the present, and the common sense that the inequalities were less "when Adam delved and Eve span." Neverthe- less, this generalization has been vehemently as- sailed ever since the question of the distribution of wealth began to weigh upon the public con- science. Conservative statesmen, and even statis- ticians, have stoutly maintained that the tendency of modern times has been toward greater indus- trial equality as well as greater political equality. The briefest possible examination of this question, though it lies beyond the field of the present inves- tigation, forms the natural introduction to it. The course of history respecting the distribution of wealth has been marked by its unevenness. In the country whose history is really our ^° ^"" own, the development of the later Mid- die Ages was distinctly toward equality of property. The dominant aristocracy of birth — to its own injury as well as that of this nation — did not accumulate capital ; and even its overlord- ship of the soil, down to the very end of the Mid- dle Ages, was productive of astonishingly small rents. Competitive rents were not introduced ENOLISB RETB08PECT. 5 until the seventeentli century.^ During the six- teenth, when the inflow of the precious metals more than trebled the price of wheat, raising it to the modern level, rents remained relatively sta- tionary, to the great enrichment of the middle classes, and the comparative embarrassment of the nobility.2 Even the law of primogeniture, which during modern times has worked so powerfully for the concentration of wealth, was during the Middle Ages comparatively ineffective. ^'^'™°k«'"- o s. J ture. The striking feature of mediaeval econ- omy was the comparatively small value of real estate. As Garnier observes, " The intrinsic value of the flocks and herds exceeded that of the pas- tures which contained them almost as much as the value of banker's bullion exceeds that of the strong room which holds it."^ As the custom of primogeniture seldom extended to personalty, it did not seriously stand in the way of the wider distribution of wealth. Even as regards realty, 1 Thorold Kogers's History of Kent in England, Contemporary Review, April, 1880. 2 It is worthy of note, however, that landless laborers also were injured at this period ; partly because the widespread conversion of farms into sheep pastures threw laborers out of employment, but chiefly because the Acts of Parliament repressing wages, es- pecially the statute of Elizabeth allowing justices to fix the rates, kept wages from rising as rapidly as prices. See Scrutton's "Commons and Common Fields," pp. 97-100, and Prothero's "Pioneers and Progress of English Farming," p. 26. * " History of the English Landed Interest," p. 154. 6 THE DISTRIBUTION OF PROPERTY. it did not effectually bar the way to a wider dis- tribution of ownership; for the oldest son could still alienate the fee-simple to creditors, or sell it to purchasers. The number of landowners seems to have increased until the middle of the seven- teenth century. Not until after the Restoration was the land of England effectually placed under the dead hand of family settlements.^ In a similar way, taxation in England during the latter part of the Middle Ages was rarely oppressive. Not only was it light, but mediBBvai ^^ direct ; and direct taxation al- Taxation, ' ways conforms in some measure to the public sense of justice, since the whole public sees how each class is taxed. England success- fully resisted the excises by which public revenues were raised upon the Continent, imtil the Parlia- ment of the Restoration, relieving the landlords of their ancient dues to the crown, transferred the burden to the shoulders of the relatively poor. For the distinctively modern era on which we now enter we possess at the very be- Engiand ot^q^qct g, reliable estimate of the In 1688. ° ° amount and the distribution of Eng- lish wealth. Gregory King's table of the com- parative incomes of the various classes in 1688 ^ 1 Brodrick's "English Land and English Landlords," pp. 42 and 43. * See Appendix I. ENGLISH RETROSPECT. 7 proves indisputably that England at the close of the Middle Ages was pre-eminently a nation of smaU proprietors. As Prothero remarks ^ concern- ing it, "whatever allowance is made for errors, the contrast is startling enough" between the England in which " three-fifths of the agriculturists enjoyed proprietary interests in the soil," and the England of to-day, in which four-fifths of the agriculturists are hired laborers. This contrast is heightened when King's table is compared with the returns in the New Domesday Book of 1875.2 King placed the total rent of agricultural land at .£10,000,000, yet estimated the aggregate income of fifteen hundred lords, baronets, and knights at less than one-fifth of that sum. In our day Arthur Arnold estimates that four-fifths of the United Kingdom belongs' to a smaller proportion of the population.^ These startling changes in the distribution of the ownership of agricultural land in England have been chiefly the work of the eigh- teenth century, or, more exactly, of the Tueseien reign of George III. This reign (1760- QeorBem. 1820) covers the one period in English history of which it is strictly true that the poor grew poorer and the rich grew richer. During 1 " The Pioneers and Progress of English Farming," p. 158. 2 See Appendix II. 8 Arthur Arnold, " Free Land," p. 7. 8 TBE DI8TBIBUTI0N OF PBOPEBTY. the earlier part of the eighteenth century the con- dition of the working-classes seems to have im- proved.i It was a time of peace, and the interest on capital fell as low as three per cent.^ Taxation was still light, the public debt was practically nil, and the passage of acts enclosing commons was hardly weU under way. With the outbreak of the Seven Years' War in 1756, however, taxa- tion and the public debt became simultaneously a source of impoverishment to the rank and file of the people, and a source of enrichment to the large landowners and the capitalists. At the same time Parliament began the whole- sale enactment of bills for the enclosure „ ,™° , of commons. Had this legislation been Enclosure oz ^ oommons. framed in the spirit of humanity, it would have enriched all classes, for the land brought under private ownership yielded far more produce than ever before. The total amount enclosed from 1710 to 1843 was over 7,000,000 acres, or nearly one-third the present cultivated area of England and Wales.^ The increase in national wealth would have been enormous had the increase been made national. There were, indeed, a few parishes in which the poor were allotted sufficient land to pasture their 1 Lecky, "England in the Eighteenth Century," vol. i., p. 610. 2 Leroy-Beaulieu, "Essai sui la Repartition des Kichesses," p. 248. 3 Brodriok, p. 55. ENGLISH RETROSPECT. 9 cows; but in general only the interests of tlie freeholders and copyholders who could prove their legal rights received any consideration. The great mass of agricultural laborers lost their pro- prietary interests in the soil, and were reduced to mere wage-earners. The further reduction of a considerable portion of the wage-earners to the rank of paupers was largely the work of the Napoleonic wars. At the middle of the eighteenth ^" ^"'*°' century the annual cost of poor relief had been £690,000. At the close of the wars it had risen to ten times that sum. This appalHng tax, paid by the occupiers of houses and lands, was nearly equal to two months' rent.^ Upon the indepen- dent working-classes it was a well-nigh intolerable burden. It was, however, light compared with the burden of national taxation. The extent to which indirect taxes, resting chiefly upon the poorer classes, were developed seems almost in- credible. During the civil wars of the preceding century, public sentiment had refused to tolerate a salt tax of fourpence a bushel. During the Napo- leonic wars Pitt raised the salt tax to fifteen shil- hngs a bushel,^ but the public made no outcry against it. Taxes like this on salt, which took the 1 Blunden's "Local Taxation and Finance," Appendix I. 2 Three thousand per cent ad valorem on the natural price of Bait. (Dowell, " History of Taxation and Taxes in England," vol iv., p. 4.) 10 THE DISTRIBUTION OF PBOPMBTY. same amount from the poorest families as from the richest, were by no means the most oppressive now levied. The protective taxes on corn, which plun- dered the rank and file of the people, enriched the landlords. This class desired the war to continue as a matter of personal profit.^ When it ended they made the tax system worse by repealing the income tax, whose burden fell on themselves, and by exacting new tariffs to keep the price of wheat at war figures. When we realize that the class best able to bear taxation was enriched by the war, we are in a position to understand what its burdens were to the middle and working classes. In 1815 national taxation reached ^668,000,000 for Great Britain alone .^ Excluding the income tax and the succession tax, which rested almost exclu- sively on the rich, there remained <£51,000,000, or an average burden of f 100 a year for every family at a time when the total yearly earnings of the great majority of English families were less than $300.^ Arnold Toynbee did not greatly exagger- ate when he wrote that during tliis period, and 1 George Eliot's country squire in " Silas Marner " expressed a popular sentiment among the landed gentry when he ridiculed the demands for peace, and declared that if peace came " the country would not have a leg to stand on." 2 Dowell, "History of Taxation and Taxes in England," vol. ii., p. 249. 3 Leone Levi "On Taxation," p. 24. For lower estimates of earnings during the war, see Thorold Kogers's "Work and "Wages," pp. 487 and 488. ENGLISH SETBOSPECT. 11 even down to 1834, "one-half of the laborers' wages went in taxes." ^ These crushing burdens upon the working-classes were, of course, comparatively little felt by the farmers and small freeholders. During .1 , , 1 War Debts. the war these classes were prosperous. The issue of paper money by England and France enormously reduced the demand for gold and sil- ver. The value of both feU. nearly one-half ; ^ in other words, prices measured in gold nearly doubled. Agricultural products whose supply could not be materially increased rose much more rapidly than commodities in general. Fanners were intoxicated by their sudden prosperity, which was almost as marked as during the rise of prices in the Elizabethan era. When leases fell in, renting farmers consented to double rents, and continued to prosper even then. Freeholders changed their scale of Hving. Many of them mortgaged their estates to buy more land, to improve their prop- erty, to make extravagant provision for their chil- dren. All this continued until the process of resuming specie payments was inaugurated. When this was completed the value of specie had risen, and prices had fallen to their old level. In the case of agricultural products the attempt was made 1 Arnold Toynbee, "The Industrial Kevolution," p. 125. 2 See Jevons's Essay in the Journal Statistical Society of Lon- don, 1865. The exact fall in the value of gold from 1789 to 1809 was 46 per cent. 12 THM DISTRIBUTION OF PROPERTY. to prevent the fall by means of exorbitant tariffs. But the supply of such products could not be ma- terially reduced by the stoppage of production. Despite the tariffs, therefore, their prices fell almost as rapidly as they had risen. Farmers, unable to meet their doubled rents, were thrown into insolvency ; and freeholders who had mort- gaged their estates were forced to give them up. The landlord and lending classes alone did not suffer. " Everjrwhere," says Prothero, "large landed properties were built upon the ruin of small freeholders." ^ But private debtors were not the principal losers, nor private creditors the principal gainers, by the fall of prices which came with the return of specie payments. During the war the national debt was increased more than three thousand mil- lion dollars. This new debt — contracted during the period of inflation — was not even then paid for pound for pound. The war, like all wars, had created not a demand for labor, but a demand for capital. The government's demands for money nearly doubled the current rate of interest. Pitt, at the advice of the loan contractors, instead of issuing bonds bearing the current rate of interest, to be refunded at lower rates when the war was over and capital again seeking investment, con- tinued to issue three per cents, selling them at an 1 "English Farming," p. 84. ENGLISH RETROSPECT. 13 average discount of one-third. The result was that the nation from the beginning paid nearly five per cent interest on what it borrowed, and in the end paid an additional fifty per cent on the principal. The public debt, increased in this way to j£ 860,000,000, represented an average burden of one thousand dollars for every family. Here was an estate created equal in value to the land of Great Britain.^ To its possessors it was worth as much, but to the nation at large it was worth nil, and to the working-classes it was a mortgage upon future wages. This ends the record of disastrous measures by which the wealth of England, so widely distrib- uted in the days of Elizabeth and the Commonwealth, became concentrated ™° ^'* of in the hands of the new aristocracy. Eeiorms. With the passage of the Reform Bill in 1832 a democratic spirit began to influence English legislation; and if old laws working for the concentration of wealth have not been greatly altered, at least no new law has been enacted work- ing seriously for evil. Since that date the great body of the people have again shared in the in- creasing wealth of the nation. The reform of the Poor Laws in 1834 put an end to the growth of 1 Beeke's estimates for Great Britain, 1800, — £720,000,000 ; Lowe's estimate for Great Britain and Ireland in 1838, — £1,200,- 000,000. (Giffen's " Growth of Capital," pp. 95-105.) 14 THE DISTRIBUTION OF PBOPERTT. pauperism ;i the repeal of the coru laws, beginning in 1842, put an end to the taxation of the work- ing-classes for the enrichment of the landowners. The restoration of the income tax in the same year made the richer classes again feel something of the burden of imperial taxation ; while factory- Acts have added to the physical strength of the working-classes, and educational Acts have in- creased their intellectual capacity to better their condition. So great is the change in the spirit of legislation, and so considerable have been the advances of the working-classes, that conservative statisticians have seriously questioned whether the last fifty years have not witnessed in England a greater increase in the property and incomes of the poor than in the property and incomes of the rich. On this point common observation is not entirely to be trusted, for the public conscience to-day is shocked by inequalities to which it was indifferent half a century ago. We must there- fore examine the conservative argument, not to determine whether other reforms are needed, but to ascertain whether the resultant of present laws, good and bad, is already toward lessened inequali- ties of wealth. 1 The numljer of paupers at this period cannot he stated ; hut the expenditure for poor relief in England and Wales for 1833 was almost exactly the same as in 1891, when the population had douhled. (Expenditure, 1833, — £8,600,000 ; 1891, — £8,643,000; population, 1833, — 14,500,000 ; 1891,-29,000,000. Edward Porritt, " The Englishman at Home," p. 37.) ENGLISH RETROSPECT. 15 Upon this question Mr. Giffen, in Lis inaugu- ral address as president of the Statistical Society in 1883, has made incomparably the strongest statement of the conserva- that ineguaii- tive position.^ Only that part of his "^= ^^ ■..111 . , , -., . Lessening. argument which deals with the distri- bution of property can be discussed in this chap- ter. It deals only, it must first be observed, with the distribution of personal property. The com- prehensive evidence submitted is a comparison between the distribution of estates admitted to probate in 1838, as described in Porter's " Prog- ress of the Nation," and the distribution of such estates to-day. Mr. Giffen contends that during the era of savings-banks the number of estates less than one thousand pounds has increased more than the number of larger estates. This, how- ever, is a point that was never questioned. Quite apart from the beneficent influence of the savings- banks in extending the ownership of registered property among the working-classes, the period has been one in which small property owners * The evidence submitted by Mr. Giflfen will be found in Ap- pendix III. Mr. Goschen's inaugural address before the same society in 1887 follows similar lines, and is made less strong, I think, by the argument that the remarkable increase in the rentals paid by the middle and working classes indicates a rela- tive bettering of their condition. Mr. Giffen more sensibly confines himself to urging that the increased rents paid by the working-classes do not indicate new hardships in their position. 16 THE DISTBIBUTION OF PBOPERTT. have largely transferred their savings from the un- registered stock of farms and shops to the regis- tered stock of corporations. Respecting the estates larger than one thousand pounds, no one has ever contended that the number of medium holdings had greatly increased. The question at issue has always been the relative holdings of the rich, and no one is anywhere considered rich who cannot live comfortably without labor. Respecting this question, Mr. Giffen's classification merely conceals the truth. The facts which Mr. Giffen at first could not, and at last did not, state, are the facts The Probate ' Records that tell the situation. Printed at some Examined, ig^gth, tho Comparative tables for 1838 and the present time run as follows : — ESTATES IN 1838.1 NUMBER. AMOUNT. Between £20 and £100 . . . 3,945 £ 214,660 Between £100 and £1,000 . . 14,391 5,330,000 Between £1,000 and £10,000 . 6,006 18,284,000 Between £10,000 and £100,000 984 23,253,000 Above £100,000 39 7,912,000 25,365 £54,993,660 ESTATES I] Iation," pp. 609, et seq. ENGLISH RETBOSPECT. 17 In other words, the exceptionally great increase in the number of estates under £1,000 was en- tirely in the savings-bank depositor class, and the increase here was in part due to the fact that in 1838 estates under £20 were not recorded. In 1838 the eighteen thousand estates less than £1,000 held 10 per cent of the personal property admitted to probate, while in 1891 the fifty-two thousand estates of this character held less than 8 per cent. On the other hand, the smallest increase in the number of estates above £1,000 was in the class of medium holdings. In 1838 the estates with more than £10,000 held 57 per cent of the wealth, while in 1891 the estates of this character held 67 per cent. If we consider the comparative gains of the very rich, the con- trast is still more striking. In 1838 the personal estates worth over £100,000 aggregated but one and a half times as much wealth as the estates less than £1,000; in 1891 they aggregated three and a half times as much. Common observation has not exaggerated the relative gains of the richer classes. These figures, it must be recalled, relate only to personal property, where the law and cus- toms of primogeniture do not seriously impede the division of estates. They therefore reveal only the brighter part of the history. The number of owners of real estate has been artificially kept 18 THE DISTRIBUTION OF PROPEBTT. from increasing with the increase of the popular tion. New buildings have been erected by new owners, but the ownership of the land remains in as few hands as it did half a century ago. Indeed, the ablest authority upon this subject maintains that the number of landowners is stiU diminishing.^ No one, I think, has attempted to indicate that the ownership of real estate in England is becom- ing more widely distributed, but others beside Mr. Giffen have made this, claim respecting the owner- ship of personalty. Mr. Goschen, when Chancel- lor of the Exchequer, made it in his inaugural address as president of the Statistical Society in 1887 ; and Mr. Porter, the author of the " Progress of the Nation," made it before the same society as far back as 1851. Mr. Goschen prudently gave no statistics except for the number of estates large and small; but Mr. Porter discussed aggregate values, and seemed at the time to have made a conclusive argument. He showed that in 1848 the aggregate value of the great estates, — those over £30,000, — was relatively less than in 1833. At the present time, however, his evidence has become an incontrovertible argument against his contention. In 1833 the estates over .£30,000 aggregated but 28 per cent of those taxed, while I Hon. George C. Brodrick, " English Land and English Land- lords," chapter iii. (Published by the Cohden Cluh.) ENGLISH RETROSPECT. 19 half a century later (1883) estates over £50,000 aggregated 38 per cent. Having thus stated in its broader outlines the course of English history respecting the distri- bution of property, there remains to be 111 J J.1 J. • J. The Present added a summary oi the present situa- jjiBtnbution tion. It is with some diffidence that of personal the writer constructs a table presenting England, this, for he has learned to distrust the statistical work of those not personally familiar with the conditions discussed. Nevertheless, it is only as regards real estate that complete official data are wanting ; and England, unlike most coun- tries,^ possesses much less reality than personalty .^ The distribution of personal estates admitted to probate in 1891 has already been presented. (See page 16.) The only question is. What multiple shall we take to find the total number of families having estates of each description? Upon this point American official statistics are more instruc- tive than any published in England. The inves- tigation of farm and home ownership in this country, so ably conducted by Mr. George K. Holmes, has brought out the fact that the annual 1 See A. de Poville's essay on The "Wealth of France and other Countries, Journal Statistical Society, December, 1893. 2 English investments abroad are worth nearly half as much as the real estate of the United Kingdom. Mr. Giffen in 1886 estimated England's income from foreign investments at $425,- 000,000. Giffen, " Growth of Capital," Appendix I. 20 THE DISTBIBUTION OF PBOPEBTT. death rate among the owners of real estate is approximately 1 in. 36. ^ The French official in- quiry into the same subject showed the same death rate. In order to find the number of personal property owners in Great Britain and Ireland, we may therefore multiply by 36 the number of estates admitted to probate in 1891. The follow- ing table results : — Personal Property Owners, ( United Kinadom. ISOl.) PEKSONS OWNINO. Below £1,000 1,882,296 £1,000 to £10,000 439,308 £10,000 and over 99,&18 2,421,252 But, as Mr. Giffen has pointed out, after reach- ing a conclusion even less optimistic respecting the number of persons holding personal Distribution ^states, these records exclude the own- oiEeai ers of realty. Regarding the latter the England. English official statistics are extremely inadequate. The only table of scientific value that can be constructed from them relates to areas and not values. In a condensed form it runs as follows : — NO. OWNERS. ACEES OWNED. 100 Acres and over . . . 42,515 28,840,000 100 Acres to 10 Acres . . 98,497 3,542,000 Below 10 Acres 825,272 630,000 1 See Mr. Holmes's article in the Quarterly of the American Statistical Society, and Extra Census Bulletin No. 98. In Massa- chusetts, where homes greatly outnumher farms, the death rate is somewhat greater, inasmuch as homes are peculiarly the prop- erty of elderly people. ENGLISH RETROSPECT. 21 The fact, however, that about forty thousand owners hold over five-sixths of the area does not prove that they hold over five-sixths of the value. Their holdings are chiefly agricultural, and the rentals returned simply prove that these owners hold about five-sixths of the agricultural property and one-sixth of the urban. The most valuable urban estates are nearly always less than one hun- dred acres, and often less than ten acres, or even one acre. The assumption of certain anti-reform writers, that these smaller estates are the estates of the relatively poor, is indescribably bad. It is probable that the forty thousand richest land- owners in England own as large a proportion of the value of English realty as the forty thousand greatest landowners own of its area. This, how- ever, cannot be demonstrated. Had we only Eng- lish statistics to judge from, it would be difficult to construct a table presenting the aggregate holdings of both realty and personalty in the hands of the different classes „ ""^^ Distribution of society. Fortunately, however, we oiau know from the probate court records ^"'gi'^^^ for New York City (as well as from common observation), that the number of estates containing realty, but not personalty, is much less than one-tenth the number of personal estates. An addition of one-tenth to the number of per- sonal property owners to find the total number 22 THE DISTRIBUTION OF PROPBRTT. of property owners, is, therefore, a maximuni ad- dition.i We also know that the average value of estates between £1,000 and £10,000 cannot exceed £4,000, and that the average value of estates between £1,000 and nothing cannot ex- ceed £400.2 The table, therefore, for the prop- erty owners of the United Kingdom would divide the aggregate private wealth ^ approximately as follows : — Distribution of Private Property. (United Kingdom, 1891.) PERSONS OWNINQ. AMOUNT OTrtTED. Below £1,000 . . . . 2,000,000 £ 800,000,000 £1,000 to £10,000 . . . 500,000 2,000,000,000 £10,000 and over . . . 125,000 7,900,000,000 2,625,000 £10,700,000,000 The number of property-owning families would be about one-third less than the number of prop- erty owners.* There remain, therefore, nearly six 1 Very frequently, however, a person owning less than £10,000 in personalty alone, owns more than £10,000 in personalty and realty combined. The number of the richest class is thus dis- proportionately increased. 2 See New York records, p. 56, and Maryland and Massachu- setts records in Appendices IX. and X. 3 The aggregate amount of private property in the United Kingdom, whether ascertained by Mr. Giffen's method from the income tax returns, or by M. de Foville's method from the probate records, is approximately £10,700,000,000. See Giffen's " Growth of Capital," p. 11, and A. de Foville's essay on "The Wealth of France and Other Countries," Journal Royal Statistical Society, 1893, p. 602. ^ In New York and Massachusetts more than one-third of the estates probated belong to women. In relatively few cases do they belong to families in which the other members are propertyless. ENGLISH RETROSPECT. 23 million families, or more than three-fourths of the people of Great Britain and Ireland, without any registered property whatever. They have, indeed, their household goods, but the total value of these can hardly exceed ,£100,000,000. If we sum up, therefore, the results of our inquiry, we find that less than two per cent of the families of the United Kingdom hold about three times as much private property as all the remainder, and that ninety-three per cent of the people hold less than eight per cent of the accumiilated wealth. 24 THE DISTRIBUTION OF PROPERTY. CHAPTEE, II. AMEKICAN KETEOSPECT. — THE OIiD SECTIONALISM AND THE NEW. The history of the forces powerfully affecting the distribution of property in the United States is a shorter and a brighter record. The imLigiants Puritau element in Old England, ■which furnished the bulk of the early immi- grants, consisted almost exclusively of small prop- erty owners and the more sober and energetic workmen.^ Their republicanism in politics was in part due to the essential equality of their economic conditions, though doubtless their reli- gious faith respecting the equality of men before God was the supremely important factor.^ From the beginning the iastitutions of New England affecting the distribution of wealth were more democratic than those of Old England to-day. In the remaining colonies the larger part of the immigration was similar in character, both as respects religious faith and economic conditions. What William Stoughton said primarily of New England in his election sermon of 1688 was true 1 Macaulay's " History of England," chap. iii. * See Bouigeaud, " Bise of Modem Democracy." AMERICAN RETnOSPECT. 25 of the great body ot the early colonists : " God sifted a whole nation that he might send choice grain into the wilderness." Except for the tares sown through the importation of slaves, the new nation promised to be a nation of equals, — a democratic commonwealth. In New England the democratic spirit was strongest. The government affected the property of the citizen most directly in the matter of taxation, and in New England from the start the bulk of the taxes was placed directly upon property.^ This system has been condemned as " mediaeval " by those who do not distinguish between what was good in the Middle Ages, and after- wards ovei-thrown by class greed, and j,g^ jjneiand what was bad in the Middle Ages, Property and afterwards overthrown by the pub- lic sense of justice. It was mediaeval only in the sense that direct taxation was mediaeval. It was substantially the system of taxation on which the English Commonwealth relied in the seventeenth century, and toward which the new democracy of England returned in the nineteenth, when the stealthy plundering of the poor through indirect taxation received its first blow. With the Revo- lutionary War, and the quickened spirit and ex- tended power of democracy which came with it, the New England system of taxing citizens in 1 Douglas, " Piuanoial History of Massachusetts," p. 17. 26 THE DISTRIBUTION OF PROPESTY. proportion to their property swept westward and southward ; ^ and in the new New England beyond the AUeghanies, where, as Emerson says, "America begins," no other system was ever known. Second only in importance to the establishment of a just system of taxation was the abolition of the English rule of primogeniture. Even other before the Revolution, in New England, Reforms. Ncw Jcrscy, Pennsylvania, and Dela- ware, this rule had been modified to a double portion for the oldest son ; after the Revo- lution all traces of it Avere swept out of existence, the custom hardly surviving the law.^ Simultane- ously the feudal privileges of great landlords and the old system of entailing estates were everywhere practically abolished. The close of the eighteenth century witnessed a democratic advance in matters relating to the distribution of wealth, almost as marked as in matters relating to the distribution of political power. But it is not the Divine order in the Influence oi government of society that forces work- Centralized ° _ •' Government, iug for cvil shall ccasc to demand an eternally awakened public conscience. With the establishment of the federal Constitu- ■■• See Schwali's " History of the New York Property Tax," pp. 45 and 67, and Eipley's "Financial History of Virginia," pp. 25 and 45. 2 Fislte's " Critical Period of American History," p. 71 ; Morse's "Life of Jefferson," p. 44. amehican betuospect. 27 tion, the classes in society ^ which had opposed the Revolution took possession of the national govern- ment, and shaped its iinancial legislation. The old prejudice of the poorer voters ^ against central- ized government is thoroughly intelligible to one ■who regards politics from the standpoint of the distribution of wealth. What Simon Sterne said respecting railroad legislation holds true of all economic legislation. The smaller the area, the stronger the pressure of popular opinion. As a rule, the middle classes can control the legisla- tion enacted under their eyes by those whom they know, but only the wealthier classes can act uni- tedly and effectively upon legislation at the national capital. In this country this has held true from the beginning, and in conformity with this rule we find the movement in the local governments to place taxation directly upon property largely offset by a movement in the national government to place it indirectly upon the wages of labor. Nevertheless, down to the opening ^° , Influence oi of the Civil War the financial legisla- slavery, tion of the national government had comparatively little influence upon the distribu- 1 General Greene thought that at least two-thirds of the land in New York was owned by Tories. (Whitelook's "Life and Times of Jay," p. 92.) 2 The poorer voters belonged to the middle classes. Property qualifications to the suffrage were next to universal down to the close of the century. 28 THE DISTRIBUTION OF PROPERTY. tion of wealth througliout the country.^ The influence which powerfully affected it was the institution of slavery. During the Revolution- ary epoch a strong sentiment in favor of uni- versal liberty rapidly gathered headway.^ In all the Northern commonwealths, except New Jersey, constitutions were adopted, either gradually or im- mediately emancipating the slaves ; while in the excepted commonwealth, and in Delaware, Mary- land, and Virginia, the further importation of slaves was prohrbited. With the close of the Revolutionary struggles, there was a sensible abatement in this spirit of liberty and equality; but the abolition movement remained powerful as far south as North Carolina until the begin- ning of the present century. The great Virgin- ians were all in sympathy with it ; Jefferson more than any one else being responsible for the ordi- nance of 1787, forever prohibiting involuntary ser- vitude in the North-west territory.^ 1 In 1860 the national taxes aggregated but |!56,000,000 a year, or less than ten dollars per family. 2 The Massachusetts Constitution of 1780 declared the right to liherty inalienable, and the Supreme Court decided that this dec- laration worked the immediate abolition of slavery. In the re- maining States of New England, and in Pennsylvania and New York, the new constitutions enacted that all slaves born after their adoption should be free. See John Fiske's " Critical Period of American History," chap. ii. 8 For the subsequent evasion of this ordinance, and the attempt to repeal it through the efforts of the wealthier landowners in Indiana, see J. P. Dunn's interesting history of that common- wealth. TSE OLD SECTIONALISM AND THE NEW. 29 The change in the spirit of the South came ■with the invention of the cotton-gin. It was to this invention, accompanied by those which built up the great cotton man- „ ™° °'f ^ o Sectionalism. ufactories in England, that the subse- quent rapid disappearance of the abolition societies in Virginia was due. The rise of the abohtionist agitation in the North had nothing to do with it.^ Slavery had become profitable, and the magnitude of the propertied interests created chilled the feel- ing and narrowed the conscience of the South, which had threatened the extermination of the evil. Von Hoist has brought out strikingly the influence of slavery in checking the production of wealth, and one might almost infer that it was intellectual folly on the part of the South not to rid its industry of the paralyzing load. But the relatively rapid advance in the value of real es- tate at the North tells but half the story, and the Southerners know the whole. Powerful as was the influence of slavery in checking the creation of wealth, it was more powerful in fostering the creation of property. The North became the land '' Mr. Beecher hit off the situation pretty accurately when he said in his Manchester address : " With the inyention of the cotton-gin, slaves that had been worth from $200 to $400 began to be worth $600. That knocked away one-third of adherence to the moral law. Then they became worth $700, and half the law went ; then $800 or $900, and there was no such thing as moral law. And finally they became worth $1,000 or $1,200, and slavery became one of the beatitudes." 80 THE DISTRIBUTION OF PROPERTY. of improved farms and better buildings; its real wealth was far greater than that of the South. But the South was the land of the richest citizens, for the withlield wages of the slaves were capital- ized into the private property of their masters. Before the invention of the cotton-gin the South was poorer than the North. In 1860 the South was the richest section of the nation.^ 1 In 1860 the average value of farm-land (improved and unim- proved) per acre in the three sections of the nation ran as follows : Free States $25.30 Border States 15.60 Seceding States 9.28 (Seaman's " Progress of Nations," Second Series, p. 572.) Kever- theless, the amount of private property in the seceding States was proportionately greater than in the other sections. The estimated true value of property (for the entire population) per capita, ran thus : — Free States ?487 Border States 497 Seceding States 560 Even the eleven States east and north of the Potomac had less property per family than the eleven States which seceded. (Tenth Census, vol. vii., pp. 4, 8.) How different the situation at the close of the last century, is brought out strikingly by the returns for the direct tax of 1798. The population of the eight free States (New Hampshire to New Jersey) barely exceeded that of the eight slave States ; yet the value of lands, town and city lots, and dwelling-houses in the former, was assessed at $422,000,000, while the value of similar property in the latter was assessed at only $198,000,000. The slaves in the Southern States were worth a little less than $70,000,000. See Timothy Pitkin's "A Statistical View of the Commerce of the U. S. of A." (Hartford, 1816), and Seaman's " Progress of Nations," pp. 615 and 573. The latter authority estimates the value of slaves, old and young, at $100 apiece in 1790, and $500 apiece in 1860. THE OLD SECTIONALISM AND THE NEW. 31 But more than this, the South was the only section chiefly in the hands of the rich. The fact that the average riches of tlie white families of the South were approx- siave imately twice as great as that of the c^^^nltlt^A. families of the North,^ only begins to bring out the extent to which the South was the section of the rich. The influence of slavery ip creating property for the whites out of the robbery of the blacks was hardly more marked than its in- fluence in concentrating the property of the whites in the hands of a comparatively few of their num- ber.2 Even in the seceding States, two-thirds of the white families held no slaves whatever, and everywhere two-thirds of the slaveowners held but one-fifth of the slaves. Not only was property in slaves concentrated, 1 S4,770 for the seceding States, as against |2,435 for the free States. 2 The Census of 1860 gave the following tahle, showing the dis- tribution of slave property : — Persons with 1 Slave 77,333 Persons with 2 Slaves . Persons with 3 to 5 Slaves Persons with 6 to 10 Slaves Persons with 10 to 19 Slaves Persons with 20 to 49 Slaves Persons with 50 to 99 Slaves Persons with 100 to 299 Slaves Persons with 30O to 499 Slaves Persons with 500 to 999 Slaves Persons with over 1,000 Slaves 46,165 88,116 65,278 61,710 35,023 8,367 2,208 74 13 1 Total Owners, 384,884; Total Slaves, 3,953,742. (Seaman's " Progress of Nations," Second Series, p. 573.) 32 THE DI8TBIBUTI0N OF PBOPERTY. but all property at the South was concentrated through the influence of slavery. As Mason of Virginia pointed out in his eloquent Sectional a^(3(jj.ggg before the Constitutional Con- Contrasts. vehtion of 1787, slavery degraded labor in the eyes of the poor as well as the rich. Few men can separate themselves from the feel- ings of the society in which they live ; and the scorn of manual labor bred by the institution of slavery impoverished the middle classes, and made it next to impossible for the poor to rise by in- dustry. Property in land became almost as con- centrated as property in slaves.^ The census of 1850 presented a most instructive table respecting the ownership of real estate in certain counties in seven different States.^ In a condensed form it ran: — ■ 1 On this point, see Seaman's classification of farms in 1860. ("Progress of Nations," Second Series, p. 572.) In the seceding States there were more farms ahove 1,000 acres than tliere were farms above 100 acres in the free States. 2 The table in full was as follows : — a Persons Owning Owning Owning Owning Owning Owning ■3 = Owning Jl.OOO $5,000 $10,000 $50,000 $100,000 $500,000 » = under to to to to to to m $1,000. $5,000. $10,000. $50,000, $100,000. $500,000. $1,000,000. 1 Michigan . . 34,084 S,599 1,781 90 28 1 Pennsylvania, 11,929 889 672 83 18 Rhode iBland, S!,983 1,025 1,552 2IG 49 1 Ohio .... 18,568 826 940 115 46 Kentucky 14,462 3,960 342 85 64 2 1 8. Carolina . 231,246 3,050 3,686 878 8.55 77 20 1 liOuiaiana . . 63,990 629 722 310 SOS 78 23 10,341 9,585 1,777 1,428 169 44 1 THE OLD SECTIONALISM AND THE NEW. 33 IK TION. KEALTT. f5,000. 150,000. qtOUjUUU AMD OVBB, Free States . 98,534 11,911 11,274 645 2 Slave States . 299,694 11,404 8,642 2,560 202 In other words, while the population covered in the slave States was three times as great as in the free States, the number of real-estate owners was actually less. In the North about two-thirds of the real estate was in holdings worth less than five thousand dollars. In the South about four- fifths of the real estate was in the larger hold- ings. The slave States contained four times as many holdings worth over five thousand dollars as did the free, and one hundred times as many holdings worth over fifty thousand dollars. It is true that the showing for Northern cities would already have been very different from that for the Northern counties selected for the census. The Boston tax-lists for 1845 show two hundred and seventeen holdings of more than one hundred thousand dollars worth of property (real and per- sonal). The same lists do, indeed, show that the number of property owners in Boston was pro- portionally much greater than in the Southern States; but they also show that quite as large a proportion of the property was in the hands of a wealthy class. The similarity in economic con- ditions between the Northern cities and the South- em States was one of the reasons why pubhc 34 THE DISTRIBUTION OF PROPERTY. sentiment in these cities was on the side of slavery- long after the rural districts were saturated with abolitionism. As Bentham once said, " Wherever there is an aristocracy, public sentiment is the child of that aristocracy." The fact that a marked con- centration of wealth already existed in our North- ern cities does not seriously modify the contrast between North and South set forth in the table. Two-thirds of the nation s wealth in 1850 was on the farms. The rebellion of 1861 was a rebellion of the richer classes in America against the rule of the middle classes. The triumph of the la1> ™° ter, however, and the utter overthrow Present Era. p -t ■\ ' i c\ i Taxes. of the old aristocracy at the South, did not bring with it the extinction of plu- tocracy in America. On the contrary, the war itself created a new plutocracy. Step by step the measures which made the Napoleonic wars so dis- astrous to the middle and working classes in Great Britain resulted in similar disasters to the same classes in America. The disaster was less, only in proportion as the war was less costly. Up to this time, as has been said, the tariff policy of the national government had mattered compara- tively little to the well-being of the mass of our citizens. With the war, however, federal taxa- tion increased tenfold,^ and amounted at the close 1 Federal revenues, 1860, $56,000,000; 1866, §520,000,000 cur- rency, or $420,000,000 in gold. TRE OLD SECTIONALISM AND THE NEW. 35 to nearly one hundred dollars for every family in the nation. Meanwhile, as in England, the capi- talist class had so shaped the taxing-acts as not only to shield, but actually to enrich, itself. Burke once said : " To tax and to be loved is not given to men." During our Civil War, to refuse taxation and to be loved was not given to men. Not only did manufacturers of every sort demand that the tariff on their products be raised to a point that cut down the public revenue by restricting importation, but some of them sup- ported increased internal revenue taxes on the products they produced. The nation was con- fronted with the curious spectacle of carriage manufacturers benefited by an increased tax on carriages, match manufacturers made rich by a heavy tax on matches, and whiskey manufactur- ers realizing fortunes at each successive increase in the tax on spirits.^ These taxes were placed, as a rule, not upon products already produced and awaiting sale, but upon those to be produced thereafter; and the price of stocks on hand was advanced by the 1 The profits of distillers, dealers, and speculators out of the liquor taxes legislation, between July 1, 1862, and Jan. 1, 1865, were estimated hy David A. Wells at about |100,000,000. Con- gressmen were among the speculators. Those who knew in advance that the tax on whiskey was to be raised, had only to speculate in whiskey certificates to- turn their knowledge into gold. See " Practical Economics," by David A. Wells, pp. 198-200. 36 THE DISTUIBUTION OF PROPERTY. amount of the new tax. Then, too, wherever possible, the internal revenue regulations were so shaped that the small producer was placed at a disadvantage compared with the large.^ In case of the taxes on whiskey, both of these policies were pursued, and distillers were actually given several months in which to produce lightly taxed whiskey before the liigher rates went into effect.^ The way in which these new burdens were borne by the mass of the people was an expression of the highest patriotism, but the way in wliich they were imposed by the powerful interests was the most ignoble form of treason. If we except the income tax, which never produced more than one- eighth of the public revenues, the fearful burdens of the war merely lent to the enrichment of the class best able to bear their weight. But the burdens of taxation were not, perhaps, those which rested most heavily upon the middle and working classes. The war of ne- The cessity created an insatiable demand j3g^t ' for moneyed capital. The government issued greenbacks in order to prevent excessive issues of bonds, but artificially depre- 1 See Ely's "Taxation in American States and Cities," pp. 83- 95. This was notably the case respecting the tax on matches. If manufacturers furnished their own. design for the internal revenue stamp, they secured 6 per cent discount on purchases from $50 to $500, and 10 per cent on purchases above $5,000. 2 Professor J. W. Jenks states that these taxing-acts were the chief cause of the existence of over one hundred distilleries, THE OLD SECTIONALISM AND THE NEW. 37 ciated these greenbacks by making them non- receivable for duties on imports, or interest on the public debt. National banks were permitted to make further issues of similar paper money, with the avowed object of facilitating new issues of bonds, but with the inevitable effect of further depreciating the paper money already outstanding. Whatever may have been the influence of this legislation in preventing further bond issues, or fa- cilitating further bond issues, or lowering the rate of interest by creating an abundance of money, there is no doubt that the depreciation of this paper money during an era of debt-making added enormously to the burden finally resting upon both public and private debtors.^ But the changes in the value of the currency when less than twenty could produce all the whiskey consumed in the country. See his article on The "Whiskey Trust, Political Science Quarterly, 1889. 1 During the period in which the currency was heing depre- ciated, bankruptcies did indeed practically disappear ; hut when the appreciation of the currency was once well under way, the ruin of business men was widespread. FAIHIKE8 IN KOBTHEBN STATES. FAILUEBS IN ALL STATES. 1860 2,733 3,676 1861 5,935 6,993 1862 1,652 1863 495 1864 520 1865 530 1866 632 1,505 1867 2,386 2,780 1873 5,183 1878 10,478 1880 4,735 38 THE DISTRIBUTION OF PEOPEBTT. were not the most fruitful source of loss to tlie masses while the war contiuued. This lay rather in the very nature of a war carried on by the issue of bonds. Just as happened in England during the Napoleonic wars, the demand for money by the public practically doubled the rate of interest throughout the country. The rate of profit ne- cessarily rose with the rate of interest, and those who continued to invest their money in business re- ceived almost as large a return relatively as those who lent it to the government. As the product of indxistry became no greater, the increase in the share that went to capital necessitated a decrease in the share that remained for labor. In some industries the share that went to capital at this time more than doubled, and the share that re- mained to labor fell almost one-half.i Despite the inflation of the currency, the price of labor,^ like the price of real estate,^ rose but little, be- 1 The Paper World in March, 1887, published the returns for nine New England paper factories in a form which brings out graphically the relative rise of profits in this industry during the period of high interest rates, and recently enacted high tariffs. CAPITAL'S 6IIABE OF LAIIOB'S SaAEE OF PEODUOT. I'BODUOT. 1860 . . 7.4 per cent. 6.67 per cent. 1860 . . 4.42 " 12.16 " 1865 . . 29 " 7.12 " 1870 . . . 56 (< 15 1880 , . 6.16 (t 16.15 " 2 For the rate of wages during the war, see the condensation of the Senate Report of 1893, on page 109. 3 The fact that the price of real estate did not materially rise TBE OLD SECTIONALISM AND TJSE NEW. 39 cause the war no more created a demand for labor than it created a demand for real estate. The primary effect of a modern war is the destruction of capital, and the destruction of capital means the increased demand for capital and the decreased demand for labor, — ^the increase of the rate of interest and the decrease of the rate of wages. The burdens of the war did not end with the war. During its progress bonds had been issued for nearly three thousand million dollars. These bonds were afterwards definitely made payable in coin, and practically made payable in that coin whose value has been almost doubled by the arti- ficially increased demand for it. The legislation which has led to an increase in the burden of debt, both public and private, lies beyond tke scope of this essay. In this general summary of the forces that have changed the distribiltio'n of wealth, it only needs to be noted that the inbrease in the nation's bonded debt during the war ex- ceeded the value of the slaves who were libo ated. Two thousand millions of propetty in the earnings of slaves were destroyed by the war; but two thousand six hundred millions of prop- during the war is brought out clearly hy the tax assessments. The Ohio returns are typical: — 1861 1862 Beal . . $635,000,000 646,000,000 Personal . . $249,000,000 . 244,000,000 1863 a . 650,000,000 " . 287,000,000 1861 " 655,000,000 " . 351,000,000 1865 It 661,000,000 " . 409,000,000 40 TSE DISTRIBUTION OF FBOPERTT. erty in the taxes of freemen were created.^ The plutocracy at the South had been destroyed, but a much richer capitalist class at the North had been created. The financial legislation and the tax legislation of the national government have, however, been but two of the three great causes which "" have operated for the concentration of Present Era. Railroads. Wealth duriug the present generation. Prior to the Rebellion, the railroads counted for next to nothing in the national stock- taking. The greater part of the property of the country was still upon the farms, and in the North was as widely distributed as property upon farms still is. To-day the railroads alone count for half as much property as the farms, and their securities are held exclusively in the cities.^ Did these secu- rities represent only the capital actually invested, no part of the country would have been enriched at the expense of the other. But approximately one-half of the present railroad capitalization rep- resents no investment whatever.^ 1 The estimate of the value of the slaves before the war is that of Seaman, "Progress of Nations," Second Series, p. 673. The national debt in 1860 was $60,000,000 ; 1865, $2,674,000,000. 2 In so far as they are held in this country. See Appendix V. 3 The writer follows the conservative estimates of Poor's Manual, 1884, and Van Oss's " American Railroads as Invest- ments," (New York, G. P. Putnam's Sons; London, Eifingham and Wilson, 1893). For striking examples of our capitalization, see Ex-Governor Larrahee's " The Railroad Question," p. 186, and Hudson's "Railways and the Republic," chap. vii. THE OLD SECTIONALISM AND THE NEW. 41 Poor's Manual, as is widely known, has put the original cost of the railroads at approximately the present bonded indebtedness. Mr. Van Oss, who is a defender of stock-watering on the ground that it prevents legislative reductions of rates, estimates that the bonds outstanding in 1890 cost the original investors not more than sixty-seven cents on the dollar, and that the stocks cost these investors not more than ten cents on the dollar. According to this approximation, the real invest- ment contrasts with the nominal capitalization as follows : — KOT HELD BY OTHEK BAIL- „ivl™. t SECUKITIES OUTSTAOTIKG. KOAD9 AKD SO "^'il'^^Ji DUPLICATED. IlfVESTOES. Stooka $4,409,700,000 13,445,800,000 $ 344,500,000 Bonds 4,123,900,000 3,680,900,000 2,466,200,000 Stocks and Bonds . 88,533,600,000 $7,126,700,000 f2,810,700,000 Other Obligations 903,700,000 903,700,000 Total Capitalization, $9,437,300,000 Total investment i $3,714,400,000 It should be observed, however, that the sum upon which the public is really pajdng interest is not the total capitalization of the railroads, nor 1 The figures in the first two columns are from the report of the Inter-State Commerce Commission for 1890 on the "Statistics of Railways," pp. 46 and 48. Concerning stocks, Van Oss's state- ment is verbatim, as follows : — "But, for $4,650,000,000 shares now in existence, the original investor certainly paid not more than $465,000,000, or 10 per cent of their face value, and probably less. Hence shares now return at least 18 per cent per annum on the actual investment " (p. 139). 42 THE DISTRIBUTION OF PROPERTY. even tlie stocks and bonds not held by other rail- roads, but rather the sum upon which five per cent net is realized by the roads. This sum in 1890 was 16,627,000,000.1 Not from the stand- point of socialism, but from the standpoint of com- mon morality, which condemns as robbery both the refusal of the public to pay interest upon cap- ital actually lent it, and the compelling of the public to pay interest on capital never lent it, the two thousand and odd millions of railroad capital representing no investment is simply capitalized extortion. But not even have the fruits of this extortion gone to the original investors. The expenditures of railroads, and the dividends they declare, have been so largely in the hands of loosely controlled directors, that railroad construction, railroad pur- chases, and railroad speculation have all served as means to divert the property of the stockholders on the outside, into the pockets of the managers on the inside. Nearly aU. the profits of this extortion from the public have passed into the hands of a comparatively few men intrusted with the manage- ment of the public highways. But if the fruits of monopoly rates have been most inequitably distributed, so also have their burdens. The most disastrous influence exercised by the mismanagement of railroads has been 1 " statistics of Railways," 1890, p. 58. THE OLD SECTIONALISM AND THE NEW. 43 owing to the discrimination practised between localities and between individuals. Despite the illegal agreements of raiboad managers not to compete with each other, the great cities have enjoyed something approaching competitive rates ; but the smaller towns and the country districts served by a single road have been charged all the traffic would bear. Wherever in these dis- tricts the fear of a neighboring road has led to any concessions from monopoly rates, these con- cessions have not been, as a rule, made openly to the public, but secretly to certain individuals.^ In the great cities, also, these discriminations be- tween individuals have been practised, and the result of the whole policy has been not only toward the building up of the great cities at the expense of the country districts, but also toward the concentration of business everywhere into the hands of those able to secure the lowest rates.^ All the great forces that have been affecting the distribution of wealth have been working in the same direction. The tax policy which has 1 On thia point, see the striking testimony of Ex-President A. B. Stickney, in Ws volume, "The Railroad Problem," chaps, iv. and xv. 2 Two of the most powerful economic hooks written in this country relate to the subject here touched upon, " The Railway and the Republic," by J. F. Hudson; and "Wealth against Commonwealth," by Henry D. Lloyd. These volumes abun- dantly demonstrate the conservatism of the generalizations in the text. 44 TBE BISTBIBUTION OF PROPERTY. burdened consumers for the benefit of manufac- turers, tbe currency policy, which has burdened debtors for the benefit of creditors, seaion^Im. ^ud the rallroad policy just described, have all worked for the impoverish- ment of the rural districts and the enrichment of the cities. When, therefore, we come to ex- amine the present distribution of property, we fijid that the contrast between the East on the one side and the West and South on the other, so frequently spoken of, only exists in so far as the East is the section of the cities, while the South and West are the sections containing the great body of the farmers.^ The contrast between the sections as regards the amount of property located within their borders is, perhaps, less marked than is commonly supposed. Indeed, there would be no contrast were it not that the South is now so pre-eminently the poor section of the nation, that its comparative poverty stands out even when one ignores the extent to which its railroads, its mines, and its mortgages are owned in the North. The amount of property located in the seceding States is now but $2,600 per family, while it is |6,000 per family in the 1 In the East (the section north and east of the Potomac), only about one person In five is engaged in agriculture, while in the remainder of the country approximately one person in two is thus engaged. THE OLD SECTIONALISM AND THE NEW. 45 remainder of the Unioii.^ Did the property in the South all belong there, the white families of that section would still possess but half as much wealth as the same number of families in the old free States. The relative positions of the sections before the war have been exactly reversed, and to-day a sectional policy that injures the South is a sectional policy that injures the poor. Nevertheless, the popular belief respecting a sharp contrast in wealth between the East as a whole and the West as a whole has abundant statistical justification, though no comprehensive figures can be presented exactly portraying the situation. The occasional statistics published re- specting the ownership of public bonds, national and State, the occasional statistics respecting the ownership of railroads, the occasional statistics respecting the ownership of mortgages, and com- mon observation respecting the ownership of mines, ranches, and city real estate, indicate, though they do not prove, that three-fourths of the public bonds, three-fourths of the railroads, and at least one-tenth of the real estate and real- estate mortgages located in the South and West, are held in the East or in Europe .^ 1 Census Bulletin No. 379. The exact figures are |527 per capita, as against $1,213. 2 As illustrations, may be cited the following: The United States Census of 1880 showed that $350,000,000 out of $417,000,000 of registered honds held by individuals were held in the Eastern 46 TSE DISTBIBUTION OF PBOPEBTT. If these suppositions be reasonable, then the average wealth of the people living in the Eastern States is just twice as great as that of those living in the South and West.^ This division, however, is merely indicated, and not demonstrated, by the official returns. It does not, moreover, bring out the c"y real sectionalism that has grown up Country, rcspectuig the distribution of wealth. The people on the farms and in the villages in the East have shared no more in the states, and that the coupons for $465,000,000 out of 1538,000,000 coupon bonds were cashed in New York, Boston, Philadelphia, or Baltimore. $221,000,000 of these last were believed to be owned abroad. The Indiana auditor's report for 189i shows that the State's foreign debt is $7,436,000, and its domestic debt but $484, 000. The latter is owed exclusively to the universities. The Iowa Railroad Commissioner's report for 1888 shows that of 28,000 stockholders in Iowa roads, but 589 were residents in Iowa ; and these held but one-ninetieth of the stock. The census investiga- tion of mortgages shows that in the East nearly all the mortgages are held by residents of the State, while in the "West nearly one- half are held beyond the States' borders. The percentage held within the State varied on this wise : — Massachusetts .... 97 > Ohio 42 New York 95 Indiana 73 New Jersey 85 Illinois 52 Pennsylvania .... 93 Iowa 54 Mr. J. P. Dunn, in an extremely able article on The Mortgage Evil, in the Political Science Quarterly, March, 1890, estimates the Eastern holdings of Western property at a larger figure than that given in the text. 1 The exact figures would be as follows : The East and foreign holdings, $31,500,000,000; the West and South, $33,500,000,000. The East contains 30 per cent of the population; the West and South, 70 per cent. THE OLD SECTIONALISM AND THE NEW. 47 advancing wealth of the past quarter of a century than the people on the farms and in the villages of the South and West. As late as 1880 the censiis estimated the value of farms as equal to the value of urban real estate, — ten bilhon dollars for each. In 1890 the value of the farms is re- turned as thirteen billions, and that of other real estate — nearly all urban — as twenty-six billions. In the Eastern States the farms had absolutely fallen in aggregate value. The small towns and villages have fared little better than the farms. The increased value of non-agricultural real estate is almost exclusively the increased value of city real estate. Fortunately the Census Bulletins pre- sent the data for a comprehensive contrast. The cities of over four thousand people, with one-third of the population, contain substantially as much taxable real estate as the remainder of the country.^ This statement has no reference to where the property is owned, and therefore involves no esti- mated deductions from the property of the rural population, and no estimated additions to the property of residents in cities. It relates, further- more, only to real estate. In the cities, as is gen- 1 The assessed value of the real estate in these cities is greater than that of the rest of the country, — $9,900,000,000 as against $9,300,000,000; but this excess is due to the fact that in New England, where the city population is exceptionally large, the as- sessed valuations are exceptionally high. (Extra Census Bulletin No. 65.) 48 THE DISTRIBUTION OF PROPERTY. erally known and can be proven, the net amount of personalty owned fully equals the amount of real estate. On the farms, on the other hand, the tangible personalty held is almost offset by the mortgages belonging in the towns and cities.^ In the towns and villages the amount of personalty is relatively somewhat less than in the cities. We have thus the material for the construction of a table showing approximately how the property of the nation is divided between city and country : — POPULATION. REALTY.' PEKSONALTY.' Cities (4,000 and over), 20,900,000 $19,000,000,000 $19,000,000,000 Eural districts . . . 41,580,000 20,500,000,000 6,500,000,000 AGGREGATE. Cities $38,000,000,000 Eural Districts 27,000,000,000 1 Live stock on farms and ranches, and farm implements, $2,703,000,000. Mortgages on acres, $2,209,000,000. (Census Bul- letin No. 379, and extra Census Bulletin No. 71.) 2 The substantial justice of these divisions is supported by the consideration of the separate items which go to make up the national wealth. These, as presented in Census Bulletins 378 and 379, may be grouped as follows : — Farms $13,279,252,649 other real estate 26,266,291,684 Total real estate $39,644,544,333 Live stock on farms and ranges, farm implements, and machinery . . . $2,703,016,040 Mines and quarries, including product on hand 1,291,291,579 Gold and silver coin and bullion . . 1,158,774,948 Machinery of mills and product on hand, raw and manufactured . . 3,058,593,441 Railroads and equipments, including $283,898,619 street railroads . . . 8,685,407,323 Telegraphs, telephones, shipping, and canals 701,756,712 Miscellaneous 7,893,708,821 Total personal property . . . 25,402,546,864 Grand Total $65,037,091,197 THE OLD SECTIONALISM AND THE NEW. 49 In this estimate no allowance is made for foreign holdings;^ but these hardly more than offset our public indebtedness,^ which is property to its possessors, though not to the na- ^^^ tion at large. If, therefore, we assume contrast, the substantial correctness of the official estimate of our aggregate wealth, we can hardly escape the conclusion that the average wealth of the families in the country districts does not exceed $3,250, while the average wealth of the families in the cities does exceed $9,000. When American political parties shall again divide upon issues vitally affecting the distribution of wealth, the clearly marked line of division will not be between East and West, but between city and country. More than was the South before the war, the cities are everywhere the strongholds of the rich ; more than was the North before the war, the country districts are everywhere the strongholds of the middle classes. For, as will be seen, not only is the wealth of the cities far greater than the wealth of the country districts, but that wealth is iu far fewer hands. 1 See Appendix V. " See Appendix IV. 50 THE DISTRIBUTION OF PBOPEBTY. CHAPTEE III. THE PRESENT SirtTATIOW. — DISTRIBTJTIOBr OP PEOPERTY BT CIjASSES. That the cities to-day, like the Southern States a generation ago, are the centres of extreme pov- erty as well as of extreme wealth, is AbBence *^ oi a matter of common observation. But conflicting ^Q determine the extent to which the Testimony. wealth of the cities is the wealth of the few, and the wealth of the country the wealth of the many, demands a careful investigation into the distribution of property by classes. Very few such investigations have been made. Neverthe- less, those that have been made agree marvel- lously in the results reached; and we do not in this country have to fight our way to the truth, against the misrepresentations of statesmen and economists. The first of these investigations to which atten- tion should be called, is that made by the Massa- chusetts Labor Bureau, and published BsttsTax iu its report for 1873. This investiga- Ketuins. -tion did not include the cities of the 1873. State, but did cover more than half of its population, as many good-sized manufacturing and THE PRESENT SITUATION. 51 suburban towns were still without city charters. The number of families in these towns was ap- proximately 160,000 as against 140,000 in the cities. The aggregate amount of taxable property in these towns was $534,000,000 as against 1,163,- 000,000 in the cities. In other words, the average amount of taxable property returned in these towns was less than half the average in the cities of the State. The nijmber of persons paying taxes upon property was nearly four-fifths the whole number of families resident. Among those paying such taxes, however, four-fifths held less than one- fifth of the property, while one-fiftieth held nearly as much property as all the remainder. The clas- sification was as f oUows : — AMOniTT OF TAX. NO. OF TAX- PAYEBS. AVERAGE AMT. OF PBOPEBTV. AGGEBQATE AMT. OF PBOPEETY. Under $50 , $50 to $300 Over $3001 . 81,574 . 20,750 2,226 1 1,079.97 7,008.59 95,718.39 $ 88,098,000 145,428,000 213,069,000 It is greatly to be regretted that the retirement of General Oliver, the head of the Massachusetts Labor Bureau, in 1873, was followed by the aban- donment of his plan to make a similar classifica- 1 It needs to be stated that the average tax rate was $1.43 per hundred, so that those taxed on more than $300 included practically all who were assessed upon more than $21,000. In Massachusetts, real estate is assessed at its ordinary selling value. The tahle published in the text is the commissioner's corrected table, from which the returns for several towns are excluded because of obvious errors. These exclusions made no appreciable change in the proportions. 52 THE DISTSIBVTION OF PROPERTY. tion of tax-payers in the cities. The contrast would doubtless have been a sharp one. Twenty- years later the assessing department of the city of Boston made a return which showed that the whole number of property tax-payers was less than one-fifth the number of families residing in Boston. For the same year the list of property owners taxed more than $1,000 showed them to possess more than half the taxable property. The next ^ important investigation to be consid- '' With the investigations made by the Michigan Lahor Bureau, and published in the Reports for 1883 and 1892, it is unnecessary to detain the general reader. The earlier Michigan investigation ■was partisan on the side of radicalism. The conclusion reached that " one two-hundredth " of the population owned sixty per cent of the real estate was only obtained by selecting such comities as would include the city of Detroit in one part of the State, and one of the great mining companies in another part. The distribution of real estate in the agricultural districts did not differ materially from that shown by the federal census of 1850. The later Michi- gan investigation, covering only the city of Detroit, seems to have taken the number of real-estate owners by districts so small as to involve constant repetition of the same names. An aggregate of thirty-two thousand real-estate owners was reached among the forty-two thousand families resident in the city. Judging from the federal census of home ownership, the real number of real- estate owners did not exceed twenty thousand, for very few fami- lies own real estate who do not own their homes. (In Boston and New York the number of real-estate owners barely exceeds the number of home owners.) The reported thirty-two thousand were divided as follows : — VAI-UKOFHOLBINGS. '^^k'Ss"'' ^"^S^^^ Under $3,000 25,720 $28,800,000. f3,000 to $30,000 5,B94 43,600,000. $30,000 and over 613 63,600,000. 31,927 $136,000,000. THE PRESENT SITUATION. 53 ered is that made by the department of mort- gages of the federal census, under the direction of Mr. George K. Holmes. No other ■ 1 1 1 The Federal country has earned through so intel- census oi ligently or so honestly an investisration ^°™® o J •> O Ownership. throwing so much light upon the pres- ent distribution of wealth. The number of farm and home owners for the entire country can be set forth in a single paragraph, or even in an eight-line table : — NUMEEE. Owned. Rented. Homes in Cities above 100,000 444,879 1,503,955 Homes in Cities from 8,000 to 100,000 . . 629,092 1,120,487 Homes outside such Cities 1,849,700 2,374,860 Farms 3,142,746 1,624,433 6,066,417 6,623,735 PEKOEBTTAGES. Owned. Rented. Homes in Cities above 100,000 22.83 77.17 Homes ia Cities from 8,000 to 100,000 . . 35.96 64.04 Homes outside such Cities 43.78 56.22 Farms 65.92 34.08 Average 47.80 52.20 In other words, nearly half the families in Amer- ica own the real estate they occupy. The pro- portion of owners, furthermore, is more than twice as great upon the farms, where the average wealth is least, as in the cities, where the average wealth is greatest. The wide distribution of property which is the characteristic of America, as distinguished from England, is only characteristic of her smaller 54 TBE DISTRIBUTION OF PROPEBTT. towns and her farming-districts. There, and there alone, can the middle classes become dominant in our political life ; because there, and there alone, are the middle classes dominant in our industrial life.i But the census investigation did not stop here. The values of all mortgaged farms and homes were ascertained and classified; and from the mass of material thus obtained, Mr. George K. Holmes, the head of the department, has prepared a table setting forth the probable distribution of the entire wealth of the nation. The fact that Mr. Holmes is not a partisan, either of conserva- tism or radicalism, gives to his estimates an un- wonted value. Though they have already been published in the Political Science Quarterly and in the Journal of the Royal Statistical Society, a brief summary is here adjoined : — MK. HOLMES'S TABLE. FAMILIES. ■WTEALTH. 1. Tenants of Farms and Homes . . 7,871,099 ^ 2,837,049,500 2. Owners of Mortgaged Farms and Homes worth less than |5,000 . 1,483,356 2,614,955,764 3. Owners of Free Farms and Homes worth less than $5,000 . . . 3,078,077 10,946,616,952 4. Owners of Farms and Homes worth ^5,000 or over 1,257,620 48,600,000,000 1 It is perhaps worth noting that in England the relative dis- tribution of wealth in city and country is exactly the reverse ; and for that reason chiefly has English liberalism been stronger in the cities. The concentration of wealth and the dominance of con- servatism are inseparable. THE PRESENT SITUATION. 55 In other words, one-tenth of the families hold about three times as much property as the other nine-tenths. The writer was led to similar conclusions by an entirely different line of investigation. In 1892 the New York legislature passed an Act^ requiring the surrogates to keep a pub- sJ^g^ta lie record of all estates brought under court their jurisdiction, whether real or per- uewTort. sonal, with the estimated value of each.^ The year following, the writer, who was lecturing upon this general subject in the School of Politi- cal Science of Columbia College, secured from the clerks of the Surrogate Courts in various parts of the State copies of these records for the three months ending December, 1892. These months were selected because during their progress no great estate was admitted to probate in New York City; and therefore a normal, or even a mini- mum, concentration was likely to be shown. The co-operation received from public officials was most 1 "An Act in relation to taxable transfers of property." Ap- proved April 30th. (" Laws of New York," 1892, chap. 399, pp. 814-822.) ^ Among the assets included as personalty are included: " Goods, wares, merchandise, utensils, furniture, cattle, provis- ions (moneys unpaid on contracts for the lease of land), and every other species of property not hereafter specified." (Section 2713, as amended in 1893.) The exemptions permitted in the mat- ter of books, clothing, furniture, and the like, were trivial, though they might have an aggregate value of a thousand dollars in the case of a wealthy family. 66 THE DISTRIBUTION OF PBOPEBTY. gratifying; and in the end returns were received from a majority of the counties in the State, — counties containing an aggregate population of more than five million. The returns received from New York City were as follows : — ESTATES. KO. VALUE. AGGBEGATE. EEAL. PERSONAL. $50,000 and over . 53 $4,471,900 $7,965,611 $12,437,511 850,000 to 85,000 . 212 1,660,833 1,867,480 3,538,313 Under $5,000 . . . 704 40,967 549,205 590,172 969 $6,173,700 $10,382,296 $16,565,996 The first important question to be determined was the approximate number of the property-own- ing classes. During these three months, twenty- five hundred men over twenty-five years of age died. If they owned any registered personalty, even the smallest account in a savings-bank, their estates had to pass through the Surrogate's Court before reaching the heirs. Yet the whole number of estates entered was less than one thou- sand, and the whole number of estates left by "males" was barely six hundred. In other words, only about one-fourth of the men who died left any property whatever, except their clothing and household furniture.^ In the country at large the 1 For the entire year 1893, more exact statistics can be given. The number of estates (testate and intestate) admitted to probate was 4,892. Of these, 62j per cent, or 3,047, belonged to men. 12,079 men over twenty-five died during the year. (Keport of the New York Board of Health for 1893.) THE PRESENT SITUATION. 57 number of men over twenty-five is identical with the number of families. In New York City, how- ever, this is not the case. This city contains a vast population of unmarried men, — immigrants from other countries and other parts of our own country. The proportion of propertyless families is therefore somewhat less than the proportion of propertyless men. If the death rate was normal during the period covered, the returns indicated about one hundred and ten thousand property- owning families.^ The whole number of families in the city was three hundred and thirty thou- sand. In other words, two-thirds of the families are, in a strict sense of the word, propertyless. This conclusion, though it is that which com- mon observation has forced upon every one famil- iar with the East side of New York, The shows how utterly fallacious is the sav- savinBs- ings-bank argument, so frequently em- '^^^ ployed by conservative statesmen and economists. In New York City the number of savings-bank accounts is nearly twice as great as the number of families. Generally speaking, every savings-bank account must pass through the Surrogate Court on the death of its owner.^ 1 In this calculation the official figures for the entire year 1893 are followed. 2 There are joint accounts and trust accounts which do not, and also, in some hanks, certain small accounts are paid over to the undertakers without the Action of the Surrogate. 58 THE DISTRIBUTION OF PBOPESTT. Yet two-thirds of the families not only possess no savings-bank account, but no registered property of any description. The conclusions reached by the Massachusetts Labor Bureau under General Oliver are incontrovertible. Great as are the benefits conferred by the savings-banks upon the more thrifty wage-earners, the bulk of deposits belong to a comparatively small class of well-to-do citizens.^ Respecting the distribution of wealth among the propertied classes, the return for New York City showed that the small estates outnumbered the 1 See the Eeports of the Massachusetts Labor Bureau for 1872 and 1873. The conclusions especially Indorsed are the following (Report, 1873, p. 228): 1. That persons not wage-lahorers are de- positors to at least one-half the total amount deposited. 2. That, as a rule, wage-labor deposits average under $50 at one time. 3. That manufacturers, traders, and lawyers use these banks in- stead of banks of deposit. 4. That capitalists, persons living on their incomes, use these banks to escape taxation and the care necessitated by other investments. The deposits made (at one time) in ninety savings-banks were «lasslfied as follows ; — • mr&lBEB. AOGfiEGATE. Deposits under $50 at one time . . . 167,601 $3,375,379 Deposits between $50 and $300 at one time 70,002 8,597,877 Deposits over $300 at one time . . . 16,426 11,973,256 These Massachusetts reports speak of certain men making deposits in all parts of the State, and otiiers who deposit a good many thousand dollars at a time in a single hank, depositing |i900 to themselves individually, and then as much more to themselves as trustees for each member of their family, and for A, B, C, D, etc., in succession. In Baltimore, Md., also, where the number of savings-bank deposits exceeds the number of families, the probate records show that two-thirds of the families possess no registered personalty. See Appendix IX. THE PRESENT SITUATION. 59 medium and large ones as much as the more schol- arly opponents of social reform would have us be- lieve. The ratio was nearly three to one in favor of the estates less than |5,000. But in value, all of these smaller estates combined represented but four per cent of the property, while the compar- atively few estates exceeding f50,000 were three times as valuable as all the remainder. The principal criticism brought against these conclusions when first published ^ was based on the shortness of the period covered. This crit- icism would have been valid, had it not come from a conservative, and had not the three months selected been taken with a view to avoid an exaggerated statement of the present concentra- tion of property. Partly to meet this criticism, and partly to determine the normal number of great estates admitted to probate, the investiga- tion was continued so as to cover a period of two years. The records for the first three months had demonstrated — what, indeed, was inevitable — that the average value of the estates less than 150,000 was the same from month to month.^ To » See The Outlook, Feb. 10, 1894. 2 NEW TOEK CITY. Surrogate Court Record, October, November, and December, 1892. ISTATEB OOTOBEa, 1892. KOVEMBEE, 1892. DIOEMBEE, 1892. NO. VALUE. NO. TALITE. NO. VALUE. 150,000 and over . 12 |3,M1,000 20 $3,239,250 21 $5,757,261 $50,000 to 15,000 . 77 1,346,069 82 1,293,173 53 899,071 Under 15,000 . . 262 184,037 251 205,516 191 200,619 60 TSE DISTBIBUTION OF PROPEBTT. determine their aggregate value it was only neces- sary to know their number. For the larger es- tates the Talue of each had to be ascertained. The record ran as follows: — Surrogate Court Kecord, New York City- , during the Two Years, October, 1892 — September, 1894. ESTATES OVER ESTATES UNDER §50,000. S50,000. NO. VALUE. KO. VALUE. 1892 (Oct., Nov., Dec), 53 $12,437,511 916 $4,128,485 1893 (Jan., Feb., Mar.), 78 97,358,4111 1,254 5,668,0802 (Apr., May, June), 96 24,023,039 1,325 5,989,0052 (July, Aug., Sept.), 61 10,343,850 971 4,388,9202 (Oct., Nov., Dec), 91 21,279,528 1,021 4,614,9202 1894 (Jan., Feb., Mar.), 83 15,966,561 1,211 5,473,7202 (Apr., May, June), 95 14,857,015 1,119 5,057 ,8802 (July, Aug., Sept.), 74 13,787,023 881 3,982,1202 Total . . . 631 $210,052,938 8,698 $39,303,1302 The estates over $50,000 were divided into realty and personalty, as follows: — Realty, $48,056,562 Personalty, $161,996,376 The results reached were briefly as follows : Including the Gould estate, which was entered during this period, the properties over ,oj $50,000 aggregated five times as much New Tork ag those smaller than that sum. Ex- cluding this estate, the large properties aggregated three and a half times as much as the smaller ones.^ 1 The Gould estate was entered during this quarter. Realty, $2,000,000 ; personalty, $70,000,000. 2 Estimated. s The latter method is the fairer ; for even in New Tork City, THE PUESENT SITUATION. 61 The numbers of the possessors of the large es- tates was but six per cent of the property owners, and represented but two per cent of the heads of families dying during these two years. The con- centration of wealth in New York City, therefore, follows substantially the same lines as the concen- tration of wealth throughout Great Britain. New York City, however, does not represent the country at large, nor even the great cities of the country. The real estate within it is more valuable than all the real es- ^"^^^ for tate in New England, excluding the Brooklyn, city of Boston, and more valuable than all the real estate in the eight commonwealths between the Potomac and Texas, excluding noth- ing. An abnormal concentration of both wealth and poverty is everywhere known to exist within its borders. Brooklyn is more fairly representa- tive of the large cities throughout the country. For Brooklyn, the records showed relatively three times as many owners of real estate, and a con- and even In a two-years' record, sucli an estate as Mr. Gould's is exceptional. In an eight-year's record such an estate would he normal. Foreign statisticians have a disposition to exaggerate the size of the great fortunes in America. Even so sensible a statistician as M. de Foville follows Leroy-Beaulieu in quoting for whatever it may he worth M. de Varigny's estimate respecting the wealth of our richest citizens. It ran as follows: J. Gould, $275,000,000; J. "W. Mackay, $250,000,000; C. Vanderhilt, $125,000,000; J. P. Jones, $100,000,000. 62 TBE DISTRIBUTION OF PROPERTY. siderable increase in the value of the smaller hold- ings. Nevertheless, even in Brooklyn the estates worth over 150,000 contained over twice as much property as all the remainder ; while the aggregate holdings of the middle and poorer classes — those owning less than $5,000 — was but seven per cent of the total.i When we turn, however, to the distinctively ag- ricultural counties, there is the sharpest kind of a contrast in the records. Unfortunately Bummaryjor there are comparatively few such coun- counties. ties in New York State, and the Surro- gates' records in many of these are most incomplete. Where every one knows to whom real estate belongs, it is not so essential that es- tates containing only realty shall pass through the Probate Court in order that the title of the heirs may be unquestioned. Furthermore, in some of these counties it was found that no statement had been required of the value of the realty in the 1 The figures for Kings County ran as follows : — NmiBEE. EDAMY. PEB80HALTT. TOTAL. $50,000 and OTer . . . 27 $2,872,100 $4,101,000 $6,973,100 $50,000 to §5,000 . . . 147 1,029,260 1,070,080 2,099,330 Under $5,000 . . . . 336 135,330 376,700 512,030 510 $4,036,680 $5,647,780 $9,584,460 The marked distinction hetween the New York and Brooklyn records was, that the latter showed comparatively few estates con- taining only personalty. The records indicated that 20 per cent of the families in >few York, and 30 per cent of the families in Brooklyn, held over \ THE PRESMNT SITUATION. 63 estates "which were brought into the courts. For- tunately, however, in a few farming counties the records were in good condition; and the best brought out clearly what the others indicated. The returns were as follows for five typical coun- ties, containing no city and no village of over four thousand people : — Keoord for Madison, Herkimer, Wyoming, Chenango, and Schoharie Counties, October to December, 1892. NUMBER. ItEALTY. PERSONALTY. TOTAL. $50,000 and over . 3 f 56,000 $195,000 $251,000 $50,000 to $5,000 . 60 334,475 288,688 623,163 Under $5,000 . . 149 243,525 221,733 465,258 202 $634,000 $705,421 $1,339,421 As the number of families in these counties was but 38,000, the record showed that nearly three- fourths of them owned registered property. Even that quarter of the families which might be classed as propertyless, included a considerable number of tenant farmers who owned some of the stock and implements with which they cultivated their farms. This extremely wide distribution of ownership was supplemented by the extremely small pro- portion of wealth in the hands of the wealthy class. Estates of 150,000 and over aggregated less than one-fifth of the weu-beine. wealth, while estates less than $5,000 aggregated more than one-third. The average wealth of the whole population in these counties Xiess Wealth but Greater 64 THE DISTRIBUTION OF PBOPERTY. was small compared with the average wealth in the cities ; but the average well-being was greater, for the wealth ministered to the comfort and inde- pendence of the great mass of the citizens. The distribution of wealth in the whole State of New York ^ is of less importance than the dis- tribution in the district lying outside of •*■ the two great cities. This district is District, tj-pical of the country at large ; for if the distribution of property is wider in the distinctively agricultural States, it is much nar- rower in the excluded metropolis. The table for the State at large, outside of New York and Brook- lyn, ran as follows : — ESTATES. KUMBEK. KEAITY. PERSONALTY. TOT At. $50,000 and over, 36 $2,188,540 $6,606,123 $8,794,663 850,000 to 5,000 . 409 2,950,325 2,233,871 5,184,196 Under §5,000 . . 1,42T 989,608 1,095,430 2,085,098 1,872 $6,128,533 $9,935,424 $16,063,957 Before applying these proportions to the nation at large, it is perhaps well to state wherein this table does not represent the real distribution of property in territory covered. (1) The small holdings of 1 The records received covered thirty-six counties, contaisiBg 4,625,000 people. The final tahle ran as follows : — ESTATES. KUMBEE. EEALTY. PEESOKALir. TOTAL. S50,000 and over. IIG §9,532,540 318,672,734 $28,215,274 $50,000 to 5,000 . . 768 5,640,408 6,171,437 10,811,845 Under §5,000 . . . 2,467 1,165,965 2,021,335 3,187,300 3,351 $16,338,813 $25,865,506 $42,214,419 THE PRESENT SITUATION. 65 real estate should be increased about one-half, be- cause of the failure to record real estate in many of the rural counties. It is chiefly the small hold- ings of realty that fail to be recorded. (2) The small holdings of personalty should be reduced about one-half, because the returns cover the gross possessions of the decedents. The small estates are pre-eminently the estates of borrowing shop- keepers and farmers. Often the payment of their debts leaves no personalty whatever, and lessens the amount of realty. Large holdings, on the other hand, are returned as low as possible, in order to avoid the inheritance tax on personal estates above $10,000. All the surrogates' clerks reporting, state that the small estates are somewhat smaller than returned, and the large estates somewhat larger. No correction, however, need be made in the aggre- gate holdings of any class. It is only the relative proportions of realty and personalty that need to be changed. The corrected table would read : — Distribution of Healty and Personalty. EEALTT.' PBHSONALTT. 850,000 and over $2,250,000 16,750,000 $50,000 to $5,000 3,000,000 2,000,000 Under $5,000 1,500,000 500,000 16,750,000 $9,250,000 1 This division between realty and personalty would hold sub- stantially true throughout the country. Under personalty the probate records, of course, include corporate holdings of real estate and all evidences of indebtedness. 66 THE DISTRIBUTION OF PltOPEBTY. Respecting the number of the property-owning classes, there is one point of xmitj between the table for this typical territory and those Number o( "^ "' the Property- for the citj of New York, on the one Owning side, and the farming-districts on the other. The table for New York City showed that one-eighth of all the families held more than |5,000 worth of property. The census investigation of mortgages showed that about one- eighth^ of the farms of the country were worth more than $5,000. With a normal death-rate the table for New York outside of the two great cities shows just the same proportion of well-to-do fami- lies. We may therefore say with much precision that approximately one-eighth of the families of the nation, city, town, and country hold more than 15,000. The proportion holding oyer |50,000 is exceptionally great in the large cities, and excep- tionally small ia the country districts ; but the pro- portion in the intermediate territory selected may be safely assumed for the entire nation. The table for the nation at large would therefore read : — NO. OP AGGREGATE FAMIJjIES. TVEALTH. ^50,000 and over .... 125,000 $33,000,000,000 $50,000 to $5,000 .... 1,375,000 23,000,000,000 Under $5,000 11,000,000 9,000,000,000 2 12,500,000 3 $65,000,000,000 1 Extra Census Bulletin No. 98, pp. 15 and 16. 2 Nearly one billion dollars added for small estates containing only household goods and the like. 8 By a family, throughout this essay, is meant a family of five. THE PRESENT SITUATION. 67 The attempt to separate the families with less than f5,000 into small property owners and prop- ertyless laborers brings out the encouraging fea- ture of the situation in America, both as compared with Great Britain and absolutely. A comparison of the table above with that on page 22 brings out the fact that, despite the difference in population, the number of wealthy "^^ T • ri • T Encouraging families in the United States is but lit- Feature, tie larger than the number in Great Britain, and their aggregate wealth less.^ It also makes apparent that the number of the well-to-do class is three times as large in the United States as in Great Britain. But the most striking con- trast between. the two countries lies in the greater number of our independent small property owners. The census investigation of mortgages brought out clearly the great number of property-owning families, and the investigation of the probate court records supplements in a natural way the con- clusions there reached. The census investigation showed that in New York City but 6^ per cent of the families owned their homes. The probate 1 Despite the enormous fortimes of the Goulds, Kookefellers, Vanderbilts, and Astors, which perhaps aggregate $600,000,000, the writer believes that the aggregate wealth of 4,047 ninillionnaires given in the Tribune's list hardly exceeds ten billion dollars. It is true that Mr. Holmes estimates their minimum possessions at this sum and their maximum possessions at fifteen billions ; but the statistics which have come to the writer's attention indicate that the minimum estimate is much the closer. 68 TBE DISTRIBUTION OF PBOPERTT. court records showed that fully 20 per cent held either realty or personalty to the value of $500. The census investigation showed that 18^ per cent of the families in Brooklyn owned their homes. The prohate court records showed that fully 30 per cent owned either realty or personalty to the value of $500. In the counties containing but a small urban population, there were relatively few estates that did not contain realty ; but in all the counties there were some estates of this descrip- tion. Altogether, the returns indicated that in the cities of the country the number of families owning over $500 worth of property was perhaps one-third greater than the number owning their homes, while in the small towns and rural districts it was perhaps one-sixth greater. As very few holdings of real estate are valued at less than $500,1 ^Q a^pQ }gjj iq ^q conclusion that in the nation at large the number of families worth more than $500 is perhaps one million in excess of the number owning their homes or farms.^ In other words, there are about seven million property- owning families, and only about five and a half million who could justly be spoken of as prop- ertyless. If, then, we assume that the latter, as a 1 Only five per cent of the mortgaged homes and farms are valued at less than $500. (Extra Census Bulletin 98.) In the South many of the farms owned by negroes are worth less than , hut there are not one hundred thousand such farms. 2 See table on page 53. THE PRESENT SITUATION. 69 rule, have household property worth $150, the final table stands as follows : — THE mjITED STATES, 18S0. ESTATES. IHJMBEB. WEALTH. WEALTH. The Wealthy Classes, — $50,000 and over . . . 125,000 133,000,000,000 8264,000 The Well-to-do Classes, — $50,000 to $5,000 . . . 1,375,000 23,000,000,000 16,000 The Middle Classes, — $5,000 to $500 .... 5,500,000 8,200,000,000 1,500 The Poorer Classes, — Under $500 5,500,000 800,000,000 150 12,500,000 $65,000,000,000 $ 6,200 The conclusion reached, therefore, is as fol- lows : Less than half the f amihes in America are propertyless ; nevertheless, seven- eighths of the families hold but one- su„i^ary eighth of the national wealth, while one per cent of the families hold more than the remaining ninety-nine.^ 1 Since the completion of this study, a volume has appeared that must set at rest all question as to extreme moderation of the estimates reached. Part II. of the Beport of the Massachusetts Bureau of Lahor Statistics for 1894: puhlishes the inventoried pro- hates for the entire State of Massachusetts during the three years 1889, 1890, and 1891. Although the estates for which no invento- ries are iiled are, as a rule, the largest, the following concentra- tion of property is exhibited : — ESrVENTOBIED ESTATES EST MASSACHUSETTS, 1889-1891. MUMBEB. VALTTB. Under $5,000 10,152 $16,889,479 $5,000 to $50,000 3,947 53,489,893 $50,000, and over 509 85,179,416 14,608 $155,558,788 In other words, the estates of $50,000 and over aggregated 55 per cent of the total amount of property ; while estates less than 70 THE DISTRIBUTION OF PROFERTT. $5,000 aggregated but 11 per cent of the total. Additional value is given to this Massachusetts report by the fact that a similar investigation was made of the probate records for the years 1879- 1881, 1859-1861, and 1829-1831, and the results published. A sum- mary for all these periods may be found in Appendix X. The most interesting period, of course, is that for the years 1829-1831. For this the record in a condensed form ran as follows : — nSrVENTOEIED ESTATES IN MASSACHUSETTS, 1829-1831. NtTMBEB. VALTIB. "Under $5,000 3,168 $3,626,816 $5,000 to $50,000 494 5,909,429 $50,000, and over 36 4,957,862 3,C98 $14,494,107 In comparing these earlier returns with those for the present time, the same caution must be used as in comparing those for the agricultural counties in New York with those for the cities. In 1830 the greater part of Massachusetts was an agricultural section, and small holdings of real estate were usually transferred to the heirs without passing through the probate courts. Nevertheless, the contrast exhibited by the records is striking enough. The larger estates were almost exclusively in the city of Boston and the man- ufacturing and shipping districts immediately about it. The record for the western half of Massachusetts, which was a section indus- trially typical of almost the entire North, ran as follows: — rNTENTORIED ESTATES IN WESTERN MASSACHUSETTS, 1829-1831. NUMBER. VALUE. Under $5,000 1,142 $1,206,402 $5,000 to.?r.O,000 124 1,202,411 $50,000, and over 3 238,486 1,269 $2,647,299 In other words, these Probate Court returns, which at least register with much accuracy the distribution of personal property, confirm the conclusion drawn from the distribution of real estate in 1850, — that prior to the Civil War the great bulk of the wealth of the North was in relatively small estates. PAET 11. THE DISTRIBUTION OF INCOMES. PART II. THE DISTRIBUTION OF INCOMES. CHAPTER IV. EUROPEAN INCOMES. — SHARES OF LABOR AMD CAPITAL. The forces which have determined the distribu- tion of property are identical with those which have determined the distribution of in- comes. In fact, these forces as a rule ™® have borne directly upon the distribu- control, tion of incomes, and through this means have changed the distribution of property. This rule is likely to be maintained. The future laws which shall make better or worse the distribution of property are likely to accomplish their end, not by the bodily transfer of property from one class to another, but by making more equal or more unequal the distribution of the future incomes of the people. In examining the question, how the incomes of the people are at present distributed, we find our work made easier instead of harder by what 73 74 THE DISTRIBUTION OF INCOMES. has been done by European statisticians. Indeed, on this point it is the American statisticians who have done the more careless work. The absence of an income tax here has been Value ot European Tax chiefly responsible for this, while the Betums. ., p -. , i < absence ot a general property tax m most countries in Europe has been partly respon- sible for the unwarranted estimates of European statisticians respecting the distribution of prop- erty .^ The income tax statistics of England and Switzerland,^ at least, make perfectly definite the distribution of incomes in those countries, and indicate the distribution in all countries where industrial conditions are similar. 1 For example: M. Leroy-Beaulieu expresses the opinion — and M. de Foville quotes it — that " three-fourths of the accumu- lated fortunes . . . are in the hands of workmen, laborers, small tradespeople, and the owners of small capitals." 2 The tax statistics of Switzerland — the one European coun- try having the general property tax — are as conclusive as those of the United States respecting the present concentration of prop- erty. Those of the city of Basel can be given for two dates four centuries and a half apart. The contrast between them throws light upon tije contention that inequalities of fortune have tended to disappear in modem times. PROPERTY TAXES IN BASEL IN 1429. (Population about 10,000.) NUMBEB OF ^^^ CENT SIZE OF HOLDINGB. TAX-PAYEKB. ^^ TOTAL PROPEETT. Below 3,000 francs (150 gulden) 1766 7 3,000 to 20,000 francs 652 20 20,000 to 100,000 francs 180 40 100,000 to 500,000 francs 30 33 Above 500,000 francs EUROPEAN INCOMES. 75 Fortunately the most searching and most widely known examination into the distribution of in- comes in the United Kingdom was not made in a partisan spirit. The conclu- ^„ i'^8_ sions reached by Dudley Baxter for the year 1868 ran as follows: ^ — TXNITED KINGDOM IN 1868 ; 6,200,000 families. NUMBEK OF AGGREGATE SIZE OF INCOMES. IKCOMES. IKCOMES. £1,000 and upwards .... 57,300 £209,481,000 £1,000 to £100 1,204,700 198,673,000 Under £1002 12,458,000 405,965,000 13,720,000 £814,119,000 In brief, less than one per cent of those receiving incomes received one-quarter of the nation's income, while about ten per cent received as much as the PEOPERTT TAXES IN BASEL IN 1879. (Population about 63,000.) NTTMBEE OF PEB CENT SI2m OF HOLDINGS. TAX-PATBBB. "'' ''*^''" PBOrEETT. Below 3,000 francs Untaxed. 3,000 to 20,000 francs 2,078 3 20,000 to 100,000 francs 1,319 13 100,000 to 500,000 francs 504 24 Above 500,000 francs 212 60 The authority for the fifteenth century is Sohonberg, "Finanz Verhaltnisse der Staat Basel im Fiinfzehten Jahrhundert," pp. 139-140, and tahle. That for the nineteenth, Schanz, "Die Steu- em der Schweiz," vol. ii., p. 48. Schonherg's tahle in full, with an estimate of the total possessions of each class, will be found in Appendix VIII. The untaxed holdings in 1879 did not amount to much more than one per cent of the total. The wealthy class — paying on more than $100,000 — owned 60.4 per cent of the taxable property, and 60 per cent of all the property. 1 " Taxation of the United Kingdom," by K. D. Baxter, p. 64. ' See note on following page. 76 TBE DISTRIBUTION OF INCOMES. remaining ninety. M. Leroy-Beaulieu, in his vol- ume on the Distribution of Wealth,^ has had the courage to say that the " English statisticians who have treated this subject, as M. Dudley Baxter, have done so in a superficial way." The humor of this observation, when made by M. Leroy-Beaulieu, will be apparent when we come to examine how profound were his own investigations. The point to be considered here is the light which subse- quent investigations have thrown upon Baxter's conclusions. Within a very recent period we have had Mr. Charles Booth's investigation of incomes among the very poor in London. The conclu- sion he reaches 2 is that thirty per cent of Lon- don families receive at most £54 a year ; yet Baxter assumed that the poorest thirty per cent of all families in the kingdom averaged ,£50 a year. Within the present year we have received Note to Table on Page 75. — The incomes under £100 were made up as follows : — NTTMBEE. AOOBEGATE, " Middle Class " Incomes under £100 .... 1,497,000 £81,320,000 Higher Skilled Labor and Manufactures, 28 to 35 shillings weekly for Men 1,345,000 66,363,000 Lower Skilled Labor and Manufactures, 21 to 25 shillings weekly for Men 5,087,000 160,652,000 Agriculture and Unskilled Labor, 12 to 20 shil- lings weekly for Men 4,529,000 97,640,000 These are incomes for individual wage-receivers, not for fami- lies. Family wages were more than double. In all the poorer classes, there were on the average 2J wage-earners to each family of five. 1 "De la Repartition des Richesses," p. 573. » " Life and Labor of the People " (1891), p. 21. EUROPEAN INCOMES. 77 the Board of Trade Blue Book, giving the wages of manual laborers in 1886. This return makes the average wages of men in the skilled trades to range from 25 to 32 shillings a week.^ Mr. Baxter assumed that they ranged from 28 shillings to 35 shillings. In other words, Baxter's estimate of wages in 1868 is higher than can be assumed for English laborers at the present time. On the other hand, respecting the income of the capitalist class, Mr. Baxter merely assumed the same concentration throughout the income-tax schedules as exists in the incomes from "trades and professions." But incomes from the trades and professions are, to a large extent, incomes from personal exertions. They are of necessity less concentrated than incomes from capital. Lack- ing the returns of the "New Domesday Book" to tell of the distribution of land, and lacking the classified returns now published respecting the taxation of inheritances, it would have been hazardous for Baxter to assume the concentration of capital we know to exist. If, therefore, we should construct a table show- ing the present concentration of in- comes in England, we could not assume England ° In 1885. greater average wages for the labor- ers than Baxter assumed; and we should have 1 General Report on the Wages of the Manual Lahour Classes in the United Kingdom. 1893. C 6889, pp. xiii., xxix., 470. 78 THE DISTRIBUTION OF INCOMES. to assume that the incomes from capital were dis- tributed in about the same way that capital is distributed.! The number of persons having in- comes above £1,000 from aR sources would be 1 Taking the year 1885 (see Appendix VI.)i we find the na- tional income to stand as follows : — I. Ikcome fkom Propeety alone. — Schedule A. Lands, Houses, etc £194,000,000 Schedule C. Public Funds 41,000,000 Schedule D. Public Companies 112,000,000 Foreign investments not returned 50,000,000 £397,000,000 II. BUSHTESS AND PROFESSIONAL INCOMES.— Sohediile D. Trades and Professions .... £180,000,000 Schedule E. Public Officers' Salaries, etc. . . 38,820,000 Schedule B. Farmers' Profits 65,230,000 Incomes between £150 and £100 29,000,000 £313,050,000 III. Incomes Below £100. — (Baxter's basis) (Population, 1885, 36,000,000) . £470,000,000 Total income £1,180,450,000 The division into classes would he ahout as follows : — Incomes over £1,000.— From property, £300,000,000, or 75 per cent of the incomes assessed. (See page 22.) From business and professions. Schedule D, £100,000,000, or 56 per cent of the incomes assessed. (See official returns, Appendix VII.) Schedule E, £10,000,000, or 20 per cent of the incomes assessed. (See official returns. Appendix VII.) Schedule B, £10,000,000 (estimate). Total, £420,000,000. Incomes, £1,000 to £100.— From property, £97,000,000, or remainder of the incomes assessed. From business and professions, £193,000,000, or remainder of such incomes. Total, £290,000,000. Incomes below £100.— From property and labor, £470,000, Total, £1,180,000,000. EUROPEAN INCOMES. 7,9 proportionately about twice as great as in Baxter's estimate, wKile the number in the two other classes would only increase in proportion to the popula- tion. The minimum concentration would be as follows : — United Kingdom in 1885. INCOMES. £1,000 and over . . . £1,000 to £100 .... Below £100 HUMBEB. AQGREQATE. 130,000 £420,000,000 1,400,000 290,000,000 14,500,000 470,000,0001 16,030,000 £1,180,000,000 In brief, about one per cent of those having incomes receive over thirty-five per cent of the national income, while about ten per cent receive half as much again as the remaining ninety. This conclusion may seem striking to those who have followed the literature on this subject since the distribution of wealth became a serious question. Leroy-Beaulieu, the Parisian author of the largest work on this sub- m ists. ject, has reached a conclusion very differ- ent. If, however, we examine the evidence he submits, we find the situation in Paris strikingly similar to that in Great Britain. In the absence of an income tax, he sensibly and conscientiously constructs the following table from the statistics of the tax on rents: — 1 This figure would, of course, te much less if based on income tax returns instead of literal estimates as to real wages. 80 THE DISTRIBUTION OF INCOMES. Parisian Incomes, 1878. (Bt Numbeb.) Leroy-Beaulieu's Table. so. OF PEE CENT APABT- OF (ASSESSED BEITT IlfOOME OF 21ENTS. NUMBEK. 3-4 REAL RENT). OCCUPANT. 468,641 68.4 Below 300 francs Below 2,400 francs 74,360 10.8 300 to 500 2,400 to 4,000 61,083 8.9 500 to 750 4,000 to 6,000 21,147 3.1 750 to 1,000 6,000 to 7,500 17,202 2.5 1,000 to 1,250 7,500 to 10,000 6,198 .9 1,250 to 1,500 10,000 to 12,000 21,453 3.1 1,500 to 3,000 12,000 to 32,000 9,983 1.5 3,000 to 6,000 32,000 to 70,000 3,049 .5 6,000 to 10,000 70,000 to 133,000 1,413 .235 10,000 to 20,000 133,000 to 266,000 421 .065 Exceeding 20,000 Exceeding 266,000 684,952 This table is open to criticism only at the begin- ning and at the end. The assumption that the very poor pay no larger proportion of their incomes for rent than do the classes above them violates common observation, not only in America, but in France. The Constituent Assembly, as Leroy- Beaulieu states in another volume,^ when it at- tempted to tax every citizen in proportion to his income, assumed that a rent of 100 francs indi- cated an income of double this sum; that rents from 101 to 500 francs indicated an income treble ; that rents from 501 to 1,000 francs indicated an income four times as great ; and so on, until rents of 12,000 francs and upward were assumed to indi- cate an income twelve times as great. This scale 1 " Traite de la Science des Finances," vol. i., p. 382. EUROPEAN INCOMES. 81 was indeed too strongly progressive ; but every one familiar with working-class families in our great cities knows that the poorer of these families usually pay one-quarter of their incomes for the rent of an unheated apartment, while the poor- est often pay one-third. At the other end of its scale the Constituent Assembly did not exagger- ate the proportion which incomes bear to rents. It is the exception when the rental value of the houses of the rich equals one-twelfth of their aggregate incomes.^ Nevertheless, the table is a conscientious one; and the important point is, what does it show? Leroy-Beaulieu claims that the extreme fewness of the great incomes demonstrates the fallacy of the popular notions respecting the concentration of wealth. If, however, the aggregate of these in- comes be estimated upon the basis he himself lays down, it will again be found that common observa- tion is more trustworthy concerning matters within its field than the conclusions of experts who scorn it. "When completed, the estimate stands as follows : — 1 In New York City, according to a recent investigation of the tax records, under the direction of Mr. Edmund Kelley, the as- sessed value of the residences of the richest men in the district severed ran as follows : — Estate of Jay Gould $226,000 J. D. Eookefeller 165,000 Mrs. W. H. 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"J O bJO .a « II r-i (B E r 1 ■ • -a • ■ S J. gfel RECENT niSTOBY OF WAGES. Ill eO iH T-l r-l tH •* CO »M g)$ 9,000,000 164,000,000 S300 to $900 . . . 19,000 112,000,000 (at 9^ 10,000,000 60,000,000 Above $900 . . . 6,000 153,000,000 (at 8^) 12,400,000 113,000,000 86,000 $227,000,000 The rental of the wealthiest twenty-three hundred families (note 1, page 121) would be $8,000,000 (8 per cent on an assess- ment of 1104,000,000), and their incomes about $75,000,000. As they pay local taxes on $300,000,000 of real estate, an income of $75,000,000 would be about 7 per cent on their probable wealth. It is certain that these families receive at least one-third of the aggregate income. A88E88BD VALUE OF PBOPEBTY OOOUPIED. 124 THE DISTRIBUTION OF INCOMES. and common observation respecting the incomes from labor of the well-to-do and wealthy classes. Nearly every family possessing $50,000 worth of property receives an aggregate family income of 15,000.^ Likewise most families pos- TheoiaBsi- sessing over f 5,000 receive an aggre- inoomes. gate incomc exceeding $1,200. There are many exceptions to this rule, partic- ularly in the rural districts ; but these exceptions are practically offset by the families who receive the income specified without possessing the speci- fied amount of property. The well-to-do class, as respects incomes, will not differ materially in num- bers from the well-to-do class as respects property. The wealthy class, however, will be considerably recruited when extended to embrace all families with an aggregate income of $5,000. The Number -jj^g number of families having over of the Lax^d Incomes. $50,000 worth of property is less than three per cent of all in most of our largest cities ; yet in Boston, as we have just seen, the number of families occupying houses worth a thousand a year is about six per cent of all. These families, with few exceptions, have 1 It will 1)6 recalled that the dlstrihution of property in the United States is approximately as follows : — iniMBEB OP AGOBEGATE FAMILIES. WEALTH. S50,000 and over . . $50,000 to $5,000 . . Under $5,000 . . . 125,000 1,375,000 . 11,000,000 $33,000,000,000 23,000,000,000 9,000,000,000 THE PBESENT SITUATION. 125 over $5,000 a year income. In New York com- mon observation would indicate that there were approximately as many families with f5,000 in- come as with $30,000 property. Judging from these indications, the class with an aggregate fam- ily income of $5,000 would exceed two hundred thousand. Any material addition to that number, however, would be unsafe ; for only in the cities and towns are large incomes from personal exer- tions possible. The seventy-five thousand families thus added to the class that was wealthy by reason of its prop- erty does not add greatly to its aggre- gate capital. Two and a half billion Tbesizeoj dollars would cover the entire addition moomes. to its property, and from the new aggre- gate one billion dollars must be subtracted for household goods. ^ The income from the balance, prior to taxation, may be taken at the average rate of interest upon mortgages, plus the average rate of taxation levied upon property,^ — or about seven per cent in all. Respecting the labor in- 1 $5,000 per family for two hundred thousand families. 2 The average rate of interest upon real estate mortgages re- corded in 1889 was 6.75 per cent. The rate, however, was less in the cities than in the rural districts. The average rate for mort- gages upon lots was 6.37 per cent ; the average rate for mortgages upon acres was 7.52 per cent (Extra Census Bulletin, No. 71). The average rate of taxation resting directly upon property was about two-thirds of one per cent of its estimated true value. See page 157. 126 THi: DISTRIBUTION OF INCOMES. comes of the wealthy class, we know that they range all the way from nothing to $50,000, and even larger sums. The number of very large in- comes, however, whether from business manage- ment or professional success, is so small that the average incomes of these families over and above the mortgage rate of interest on their property should hardly be placed above 15,000.1 jj; js placed at $3,500 in order to present the minimum concentration of incomes. Both the number of the well-to-do class and its aggregate property have been diminished by the families of medium estates transferred "^^ to the wealthiest class. The amount Moderate „ . , , . ~ -, -, Incomes. 01 Capital remaining to it after deduct- ing for household goods is less than twenty billions. The average rate of interest realized, prior to taxation, is unquestionably about seven per cent. The average labor income of this class is more difficult to reckon. Rarely do such families receive from their labor less than 1 The writer believes that the numher of large professional incomes is commonly over estimated. It is doubtful if one pro- fessional man in a hundred receives $5,000 a year from his pro- fession. The families not possessing $50,000, but receiving an aggregate income of $5,000, are, in the main, families possessing upwards of $25,000 worth of property. See the Forum articles of Dr. Carroll and Dr. Shrady, previously referred to. Only about one minister in a himdred receives as much as $3,000. Dr. Shrady's estimate that five hundred physicians in New York City receive upwards of $5,000 does not imply that the number for the entire country would reach five thousand. THE PRESENT SITUATION. 127 eight hundred dollars a year, and not infrequently they receive above three thousand. The average must certainly be placed as high as twelve hun- dred dollars. The incomes less than twelve hundred dollars are chiefly, but not entirely, from labor. The amount of property belonging to the poorer seven-eighths of our people, as '^^ we have seen, may reach nine billions ; incomes, but the aggregate of household goods will exceed one billion. The labor incomes will generally range from two hundred dollars a fam- ily, on the Southern farms, to a thousand dollars among the most skilled workmen in the Northern cities. The most poorly paid classes, however, are by far the largest ; and the average family income from labor should not be put higher than $500 in the towns and $300 in the rural districts. As three-fifths of the families live in the rural districts i the average would be |380 for all. The table showing the distribution of the national income from both property ^ and labor stands therefore as follows : — 1 On farms or in villages of less than one thousand people. 2 It should perhaps he recalled at this point that the private property in the country, though similar in amount, is not identi- cal with the tangible property covered by the census estimate. The latter includes public property, and property belonging to church and charitable corporations, but does not include the public debt nor the intangible property of business firms. 128 THE DISTRIBUTION OF INCOMES. Income of the tTnited States. (PRIOK TO TAXATIOK.) Distribution by Classes. FAMILT NUMBEK OP AVERAGE AGGREGATE INCOME.^ FAJalLIES. INCOME INCOME FEOM FROM LABOR. LABOR. $5,000 and over . . . 200,000 $3,500 $ 700,000,000 85,000 to 81,200 . . . 1,300,000 1,200 1,560,000,000 Under $1,200 . . . . 11,000,000 380 4,200,000,000 1 12,500,000 $6,460,000,000 FAMILY CAPITAL ATEBAGB AGGREGATE TOTAL INCOME. ( (MILLIONS). INCOME INCOME INCOME. FROM FROM CAPITAL. CAPITAL. $5,000 and over, $34,500 7 per cent $2,410,000,0001 $3,110,000,000 $5,000 to $1,200, 19,000 7 per cent 1,330,000,000 2,890,000,000 Under $1,200 . 7,500 8 per cent 600,000,000 4,800,000,000 $61,000 $4,340,000,000 $10,800,000,000 If we carry our classification farther, we find that more than five-sixths of the income of the wealthiest class is received by the 125,000 richest families, while less than one-haLf of the income of the working-classes is received by the poorest 6,500,000 families.^ In other words, one per cent of our families receive nearly one-fourth of the national income, while fifty per cent receive barely one-fifth. 1 Chiefly for the sake of round totals, $20,000,000 is added to the labor incomes of the working-classes, and $5,000,000 subtracted from the income from property of the wealthiest class. 2 No precise line can be drawn, but there are abundant data to prove that the better-to-do two-fifths of the working-classes re- ceive a larger income than the remaining three-fifths. See the schedule of weekly wages in the Massachusetts Labor Keport of 1889, and the schedule of daily wages in the Missouri Labor Eeport of 1890. THE PRESENT SITUATION. 129 To sum up tlie whole situation, therefore, it ap- pears that the general distribution of incomes in the United States is wider and better , Summary than in most of the countries of western lor Europe. Despite this fact, however, «'°'^°"='i one-eighth of the families in America receive more than half of the aggregate income, and the richest one per cent receives a larger in- come than the poorest fifty per cent. In fact, this small class of wealthy property owners receives from property alone as large an income as half of our people receive from property and labor. PART III. TEE DISTRIBUTION OF TAXES. PART III. THE DISTRIBUTION OF TAXES. CHAPTEE VII. KATIONAIi TAXATION. — INJUSTICE OF rNDIRECT TAXES. The incomes described in the preceding chapter were incomes prior to taxation. It remains, there- fore, to determine what part of the income of each class is taken by the public to defray public ex- penses. It is beyond the scope of this essay to discuss the question how the burdens of taxation should be distributed. It is, however, within its province to note how little differ- '^^ Accepted standards ence there is m essence between the oi justice, principle of the property tax commonly accepted in this country and the principle of the income tax as advocated by the more progressive economists and statesmen of Europe. The doc- trine that the very poorest classes should be de- prived of needed food and shelter ia order to pay 133 134 THE DISTRIBUTION OF TAXES. the same percentage of their incomes to the state as the very rich, has now as little standing before the intellect of Europe as it had before the heart of this country when the greater justice of the property tax was recognized. The proportional income tax as now advocated by most European thinkers concedes that an "existence minimum" should be exempted, and only the excess of in- comes above this minimum be taxed proportion- ately.^ The principle that permanent incomes from property should be taxed more heavily than life annuities, which have but half their selling value, and much more heavily than labor incomes, which have no selling value at all, is rapidly being recognized as self-evident, not only among thinkers, but among statesmen, — and among statesmen out- side of democratic Switzerland. It was in recog- nition of this principle that the Dutch Minister of Finance, M. Pierson, secured the introduction of a general property tax in 1891, to supplement the income tax ; ^ and it was in recognition of this principle that the Prussian ministry urged the same measure in 1892. The proportional income tax thus modified would distribute the burdens of taxation among the various classes, along almost the same lines as the equal taxation of property so long demanded by the general public in America. 1 E.g., Mill, Rau, and Schaeffle. 2 See article by M. Greven in Economic Journal, 1892. NATIONAL TAXATION. 135 For example, were a proportional income tax of tMs rational sort to be substituted for existing taxes, the public conscience would not tolerate the taxation of family incomes s^nanluzed below $350, and would exempt this income Tax amount from the income of every lam- property Tax. ily before taxing the balance as heavily as the largest incomes are taxed. On this basis the property and taxable incomes of the three great classes would stand as follows: — PEK CENT INCOMES TOTAl TAXABLE OF TOTAI, OF TAX. PROPERTY.! INCOME.l PfiOP. INC. $5,000 and over, $35,500,000,000 $3,040,000,000 55 47 $5,000 to $1,200, 20,500,000,000 2,435,000,000 31 38 Below $1,200 . 9,000,000,000 950,000,000 14 15 Did we further allow for the fact that the in- comes of the two poorer classes are chiefly from labor, and therefore should be taxed at a lighter rate than incomes from property, the assessment of each class would be almost precisely the same, no matter which method was used to determine its tax-paying ability. There is no greater mis- take than the assumption that the American doc- trine of the equal taxation of property and the non-taxation of labor rests upon any peculiar philosophy respecting the obligations of citizens. 1 See table on page 128. To capital o£ each class add value of household furniture ; from income of each class subtract $350 for each family therein. 136 THE DISTRIBUTION OF TA-XBS. Public conceptions of justice do not rest upon political philosophies. At the basis of every system of taxation approved by the public con- science is the same instinctive conception that all classes should be taxed in proportion to their respective abilities. The doctrine so long ac- cepted in America, that each class should be taxed in proportion to its property, indicates substan- tially the same sense of social justice as the new European doctrine, that each class should be taxed in proportion to its income over and above an ex- istence minimum, and the property-owning classes pay an additional tax on their incomes from prop- erty. Whatever system of taxation the public sense of justice may require in the future, that sense of justice at present, not only in America, but among the awakened peoples of Europe, demands that each class should be taxed sub- stantially in proportion to its property. To what extent do our present taxes conform with this demand ? In answering this question, the sharpest pos- sible distinction must be made between national and local taxation. Our local taxes are almost wholly direct. The public knows how it is taxed, and the public sense of justice is kept awake regarding the distribution of these taxes. Our national taxes are wholly indirect. The general public does not see how it is taxed ; and the whole NATIONAL TAXATION. 137 subject is thus taken out of the control of the public conscience, and placed under the control of powerful private interests. Our system of national taxation was copied directly from that in vogue in Europe at the time of the formation of our srovern- The Growtli ment, and is now only less burdensome of our than the European systems because ^^.tionai ■*■ *^ Tax Syetem. fewer of our public expenses are borne by the national government. Our school system is entirely supported by local taxes ; our police system is entirely supported by local taxes ; and even our military expenditures, including the enor- mous pension appropriations, are relatively less than the military expenditures in Europe. But if the amount of national taxation is less, the system by which it is raised is worse. In the beginniag it was not so. Public sen- timent in this country against indirect taxation, and in favor of unrestricted commerce, was far in advance of public sentiment in Europe. Frank- lin and Jefferson and Madison would gladly have negotiated a reciprocity treaty with England, but Pitt found that he could not persuade the Eng- lish Parliament to ratify such a treaty. When the Constitution was adopted containing the clause requiring " direct taxes " to be apportioned among the States according to their represen- tation, it was not understood to preclude the 138 THE DISTRIBUTION OF TAXES. levying of such taxes. Not only was a direct tax apportioned in 1798,^ but this tax, in one of its schedules, was made as sharply progressive as the great body of anti-monopolists would now demand. The dwelling-houses 2 of the entire country were divided into ten classes ; those worth under f 100 were exempt from taxation ; those worth between that sum and $500 were taxed one-fifth of one per cent ; and those worth higher sums were taxed at rates gradually rising to one per cent where the dwelling was worth $30,000. Even at this time, however, the value of property in the several States did not correspond with the voting pop- ulation ; and the portion of the direct tax not col- lected from dwellings had to be levied at different rates in different States. When a direct tax was apportioned in 1813, these inequalities had be- come more marked. In Connecticut and Rhode Island, for example, the amount of property for each family had become almost twice as great as in Vermont and New Hampshire ; ^ while in Mass- achusetts, where the tax was apportioned among the counties according to population, the rate was more than twice as heavy in some counties as in 1 Act of July 14. 2 Including lots not exceeding two acres. * In New Hampshire the value of real estate had risen from $132 per capita in 1798 to |165 in 1813 ; in Conneoticut it had risen from $194 to |326. NATIONAL TAXATION. 139 others.^ The toleration of such inequalities was, of course, impossible; and the apportionment of direct taxes was abandoned with practically univer- sal consent. Down to the time of the Civil War, however, our system of national taxation com- pared favorably with that of any country in Eu- rope, as regards the method of its levies as well as their amount. With the war, however, the situa- tion changed. The thought of this nation became absorbed with other questions, at the time that the European nations began to reform their systems of taxation. Democratic Switzerland, which had never completely lost the mediaeval system of tax- ing property, took the lead in the revolt against indirect taxation, reducing it to an insignificant rdle, and practically displacing it with propor- tional and even progressive taxes upon property and incomes. England has not gone so far in this democratic direction; but her income tax, which was introduced as a temporary expedient on the repeal of the corn-laws, has now become a permanent part of the national budget, yielding $80,000,000 a year, while the progressive inheri- tance tax yields 170,000^000 more. Germany has followed in England's footsteps ; dnd Prussia now collects $29,000,000 a year from a progressive income tax, besides levying ia small ta.x,on inheri- 1 Seaman's " Progress of Nations," 605. Pitkin's "Statistical View of the Commerce of tlie V, S. oi A.," p. 329. 140 THE DISTRIBUTION OF TAXES. tances. Even in France, where the income tax is only now being established, the taxation of in- heritances places an annual burden of $40,000,000 upon the property owners.^ In fact, inheritance taxes have almost reached into Africa, Spain levy- ing such a tax. In our nation alone do the na- tional taxes remain exclusively upon consumption, and thus burden the poorer classes out of all pro- portion to their abilities to pay. The manner in which indirect taxation inevi- tably overburdens the poorer classes has been the theme of too many essays to require treatment in a statistical chapter^ on the present distribution of taxes. It only remains, therefore, to state very briefly the chief sources of national revenue, and the probable proportion of each important tax that falls upon each of the three great classes of incomes. Our national revenues have for several years aggregated a little less than four hundred million dollars.^ All but twenty millions of this sum is raised by customs and internal revenue duties,* 1 " The Inheritance Tax," by M. West, p. 20. The tax on suc- cessions in 1892 was 209,859,500 francs; the tax on gifts, 22,551,500 francs more. The figures for Germany are for the fiscal year 1892-1893. Those for England are for the fiscal year ending with March, 1896. 2 The writer had occasion to discuss this subject in a paper on The Taxation of Labor, in the Political Science Quarterly, September, 1886. 8 In 1890 the figure was $403,000,000. * The receipts from customs are now but little in excess of the receipts from internal revenue. Were the customs duties on NATIONAL TAXATION. 141 and nearly three-quarters of it from taxes resting upon liquor, tobacco, sugar, and clothing. The distribution of these taxes is fairly typical of the distribution of all. The tax upon liquor is practically the same per gallon upon the consumption of all classes. It is absolutely the same so far as the internal revenue duties are concerned, inoiaenoe and the public revenue from the more on Liquor, heavily taxed imported liquors is a mere bagatelle. The quantity of liquor consumed by the ordinary family with $5,000 a year and up- wards is certainly not more than double that con- sumed by a family of the well-to-do class, or more than quadruple that consumed by a family with less than fl,200 a year. But assuming that the wealthiest class consumes all of the imported wines, and this disproportionate share of the remaining liquors in addition, it still pays but one-twelfth of the aggregate tax, while the well-to-do class pays a sixth, and the remaining class three-quarters. The tax upon tobacco is relatively a more seri- ous item to families with large incomes. It is true that the internal revenue incidence duties are in the main so much per on Tobacco, pound on the quantity consumed, but the government receipts from imported tobacco liquor and totacco classed with the internal revenue duties there- on, the aggregate would he more than one-halt the total revenue. 142 THE DISTRIBUTION OF TAXES. constitute about one-fourth of its revenue from this source. The tax on imported tobacco falls almost exclusively on the wealthy and well-to-do classes. Assuming that the wealthier families pay three times as much for tobacco as the well-to-do, and that the two classes consume all the imported tobacco, and their per capita share of the domestic product, the wealthiest class still pays but one- tenth of the total tax, the well-to-do class but one- quarter, and the remaining class two-thirds. The tax upon sugar is little better than a per capita tax upon all classes. The tax upon cloth- ing, however, from one point of view, Incidence of the Taxes faUs morc heavily upon the wealthier on Sugar and cii^gggs than any other of these indirect Clothlne. '' taxes. Making all allowance for cloth- ing purchased abroad, by the wealthier classes, it remains possible that a family with over f5,000 a year usually pays as much for cloth as three fam- ilies of the well-to-do class, or twelve families with less than $1,200 a year. Upon this basis the wealthy class would pay one-eighth of this tax, the well-to-do class over one-quarter, and the remaining class three-fiftlis. From another point of view, the wealthy class, or rather a part of it, is really enriched instead of burdened by the taxes on sugar and clothing, both of which are framed so as to increase the revenues of American manufacturers. NATIONAL TAXATION. 143 This phase of the question, however, may be ignored.! When we consider only the revenues actually received by the government the 1 • • -11 IT- 1 Conclusion. conclusion inevitably reached is that the wealthy class pays less than one-tenth of the iudixect taxes, the well-to-do class less than one- quarter, and the relatively poorer classes more than two-thirds. The table summing up the in- cidence of these taxes in 1890 would stand as follows : — CLASS OF TOTAL TOTAL NATIONAL TAXATION TO rNCOMES. INCOME. PBOPEKTT. TAXES. Income. Property. Q C C «> "IP $ $5,000 and ) gpjjpQ 35,500,000,000 35,000,000 .01 .001 over . . ) > I J *^'^^*° [2,890,000,000 21,500,000,000 85,000,000 .03 .004 $1,200 . ) ^oi^ The figures are those of the census, except in a few States where these did not include corporate property assessed by State Boards. The additions made on this account were as follows: Massachusetts, $213,000,000 ; Connecticut, 177,000,000 ; and Loui- siana, .pis, 000, 000. According to the Report of the Massachusetts Tax Commissioners for the year 1894, nearly $400,000,000 more might be added to the amount of taxed personalty in that com- monwealth ; but the Commissioners' figures include savings-bank deposits and other property taxed at much less than the local rate on realty. 2 The proportion of taxation borne by personalty in two of the Middle States — New Jersey and Pennsylvania — is even less than the census figures indicate, since personalty taxed at a light rate is included in the returns. In Delaware and New York the exemption of personalty is somewhat less marked than would appear. Nevertheless, these two States, in the order named, are altogether pre-eminent for the injustice of their local tax systems toward the owners of real estate. LOCAL TAXATION. 15i EEALTT. PEESOKAITY. PEB CENT. New York ... $ 3,404,000,000 $ 382,000,000 11 Pennsylvania . . 2,042,000,000 618,000,000 30 Other States. . . 13,510,000,000 5,819,000,000 43 Unfortunately it is the New York figures that have been continually paraded before the world. Regarding Pennsylvania, it should be said that this commonwealth has never yet completely adopted the general property tax theory, though it has moved steadily in that direction. During the last few years, especially, has personal prop- erty been made to bear more nearly its just share of taxation. The gross failure of New York to conform with the obvious demands of justice is due to the influence of New York City, whose middle classes are weak, and whose immigrant poor are indifferent to questions of taxation, local as well as national. Serious efforts to tax personal property fail only where they ought to fail, — only where the principle of equal taxation is abandoned, Wlierethe and the attempt made to tax personalty Taxation of twice. To tax both the mortgage and ^'ersoiaity the property mortgaged, both the cor- poration and the stockholder, both the property within the taxing district belonging to persons outside of it and the property outside the taxing district belonging to persons within it, is double taxation. If accomplished, it would violate the 152 THE DISTRIBUTION OF TAXES. fundamental principle of the property tax. Mort- gages are simply certificates of part ownership in the property mortgaged. Where the principle of the property tax is applied, as by the English income-tax law,^ and by the measures the farmers are urging American legislatures to accept, the owner of the mortgage pays his proportionate share of the tax on the property.^ Shares in cor- porations are simply certificates of part ownership in the property of the corporations. Where the principle of the property tax is applied, the cor- poration is taxed upon its property in the same way and at the same rate as an individual. Per- sonal property lying in one taxing district, but owned in another, should be taxed once, and once only. Where the principle of the property tax is applied, it is taxed like real estate where 1 See Dowell's "History of Taxation and Taxes in England," vol. iii., pp. 114, 115. 2 This principle sliould to applied to railroad mortgages as well as those resting upon individual real estate. Only in this way can bondholders — especially foreign bondholders — be made to bear their share of local taxation. The taxation of mortgages, though the same thing in reality as the taxation of bonds, is not surrounded by the same legal difficulties. The mortgage has a situs in the State where it is recorded. The decision of a bare majority of the Federal Supreme Court, that a State could not tax foreign-held bonds in its corporations (R. R. v. Pa., 15 Wall. 323), rested on the legal fiction respecting the situs of a bond. "Where the law makes the mortgage a part interest in the estate mort- gaged, the foreign owner may be taxed. See the unanimous decision of the Supreme Court of Oregon in Mumford v. Sewall, 11 Oregon, 67, 72. LOCAL TAXATION. 153 it is located, without reference to the residence of its owner. As time goes on, the equal taxation of personal property steadily becomes easier. As firms change into corporations, the value of their property becomes ascertainable to a de- ofpsrsonaity gree never reached by real estate. Fif- Be<:o™'°e ° *' . Easier. teen years ago the worst abuse in the local tax system in this country was the systematic exemption of railroad property. But the common- wealths which have set to work to tax railroads as they tax real estate, have found railroad prop- erty by far the easier to value. Connecticut, for example, has now for years assessed its railroads at the value of their stocks and bonds, — taking the proportion thereof fixed by Connecticut mileage in the case of interstate roads. The stocks and the bonds obviously represent the whole property, and their value can be found from the news- papers. In Indiana, where a similar system has been in force since 1891, 6,292 miles of rail- roads of very ordinary value are now taxed upon 1157,000,000, or $25,000 a mile. The railroads are assessed at as high a rate as the farms and homes. The same system is being applied to other corporations ; through it, and through it alone, can all corporations doing an interstate business be justly taxed. No State has the right or the power to tax such corporations upon the 154 THE DISTRIBUTION OF TAXES. whole of their property. But every State has the right and the power to tax them upon the pro- portion of their total property corresponding with their business within the State.^ This discussion of local taxation in the United States has seemed necessary because of the wide- spread opinion that nearly all local taxes in America fall upon real estate, and thus greatly overburden the poorer classes of property owners. It is true that over one-third of the personal prop- erty still escapes taxation. Nevertheless, the rapid abandonment, during the past decade, of the legal fiction respecting the situs of personalty, and the wider application of the principle that all property should be taxed at the same rate, and at the place where it produces its revenue, have made this abuse much less flagrant than formerly. The personal property that escapes taxation is indeed pre-emi- nently the property of the rich; the homes and 1 In order to be just, such taxes should be upon the capital, or capitalized net earnings of the corporations, and not on the gross receipts ; for it is only the tax on capital that cannot be shifted in some degree upon the public For the incidence of various taxes the reader is cordially recommended to consult Professor Seligman's admirable essay on the Incidence of Taxation. Pro- fessor Seligman criticises the generalization that the taxation of property is the taxation of the property owners ; but he himself holds that the tax upon land cannot be shifted from the land- owner, that the tax upon net earnings cannot be shifted from the stockholders in corporations, and that the taxes on other prop- erty cannot be shifted in case they are general. £OCAL TAXATION. 155 farms ^ which are overburdened are pre-eminently the property of the smaller holders. Nevertheless, the line between the classes as to the form of prop- erty owned is not a sharp one, and the average rate of taxation on the property of the rich is but little greater than the average rate paid by the relatively poor.^ The percentage of the property tax that is shifted upon the shoulders of the propertyless is relatively small. It is, of course, greatest in 1 The writer knows no 'better example of the common-sense of American farmers respecting their own interest, and the folly of city experts who think them fools, than the way in which the former have clung to the taxation of personal property. One of the most hrilliant attorneys in New York, Mr. Thomas G. Shear- man, has written at length to show that everywhere it is the farmers who pay the hulk of the taxes on personal property. But everywhere he loses sight of the fact that the personal property returned in the rural counties is almost exclusively returned in the towns and villages of those counties. In Ohio, where he finds several illustrations, the value of farm-land equals that of urhau realty, yet the aggregate value of farmers' personalty — includ- ing as such all the live stock, and all the carriages, wagons, watches, and pianos in the State — is hut $90,000,000, while the value of merchants' and manufacturers' stock, money, credits, etc., is $223,000,000, and that of hanks, railroads, etc., another $182,000,000. These are ahout the proportions in most States with fairly good tax systems, and the farmers know it without statistics. 2 Even the taxation of mortgaged property entirely to the mortgagor does not result in the exemption of the richer class. The mortgagor pays less for the possession of the property, because he pays the tax. However, California's experience in taxing mortgages to the real owners, and New England's experience in taxing savings-hanks and public honds, entirely run counter to the claim of the creditors that the direct taxation of their loans increases the rate of interest to the full amount of the tax. 156 THE DISTRIBUTION OF TAXES. the large cities, where personal property in tlie largest measure escapes taxation, and property owners refuse to erect new buildings The Shifting ^jjtii ^Yie rentals will yield them as oj Evaded •' Taxes. much as tax-free investments. But the field of tax-free investments has become a limited and overcrowded one. In only a small degree, therefore, does the exceptionally heavy taxation of real estate direct investments to other channels. Even in this degree it is the rental of buildings alone that is affected. The excep- tionally heavy taxation of land does not lessen the supply of land, nor increase its rental ; and in the largest cities the value of the land, even in the tenement-house districts, approximately equals the value of the buildings.^ Were it not for the poll-taxes and the license- taxes still employed by local governments, it would be difficult to defend the proposition that the small property owners pay a much heavier percentage on their property than the larger. The property tax averages about three-fourths of one per cent upon the actual value of all property ; and it is doubtful if it falls below three-fifths of one per cent for the wealthiest class, or rises as high as one per cent for the great body of the people. However, about $50,000,000 a year is collected from poll-taxes, liquor licenses, etc. ; and three- ' See Boston Assessors' Eeport for the year 189i, p. 33. LOCAL TAXATION. 157 quarters of these taxes fall upon the relatively poorer classes. The final table for the distribu- tion of local taxation would therefore stand ap- proximately as follows : — Distribution of Iiocal Taxation, CLASS OP NO. OP TOTAL TOTAL LOCAL TASE8 TO INCOMES. FAMILIES. PBOP. INC. TAXES. INC. PBOP. (MUlions.) (Millions.) (MilUons.) 15,000 and over, 200,000 $35,500 | 3,110 $220 .07 .006 $5,000 to 11,200, 1,300,000 20,500 2,890 170 .06 .008 Under $1,200 . 11,000,000 9,000 4,800 125 .03 .014 12,500,000 165,000 $10,800 $5151 In other words, our system of local taxation is the most just in the world to the poorer classes. In proportion to incomes, the taxation , Summary. is progressive. From the incomes less than $1,200, less than three per cent is taken; from the incomes above $5,000, seven per cent is taken. Nevertheless, even these relatively hu- mane burdens rest twice as heavily upon the prop- erty of the poorer classes as upon the property of the rich. When these local taxes are joined with the national, the aggregate tax is one-twelfth of the income of every class. There is no exemp- tion of wages. The wealthiest class is taxed less than one per cent on its property, while the mass 1 EXTRA CENSUS BULLETIN NO. 70. Taxes on property, including corporations . $465,000,000 Licenses, poll-taxes, etc, (about) 60,000,000 $515,000,000 158 THE DISTRIBUTION OF TAXES. of the people are taxed more than four per cent on theirs. In this way the separation of classes is accelerated by the hand of the state. The investigation of the present distribution of wealth is now complete. We found in the English retrospect that the concentra- ConcluBlon. tion of wealth has been going on rapidly despite the reforms of the present century. In our own country the Civil War overthrew the once dominant cause of the separation of classes, but called into activity new forces working to the same end. The dominant forces to-day are all working toward the concentration of wealth in the cities, and the impoverishment of the country districts. In the cities these forces are working toward a yet narrower concentration. The wealth of the cities is as much more concentrated as it is greater than the wealth of the rural districts. Taking city and country together, we found that the great body of small property owners now hold barely one-eighth of the national wealth ; and that one family out of every one hundred owns as much as all the remainder. Turning to the in- comes of families, we found that in this country, as well as in Europe, two-fifths of the product of industry goes as the share of capital, quite apart from the earnings of the capitalist classes from personal exertions. One-tenth of the families have the same aggregate income as the remaining LOCAL TAXATION. 159 nine-tenths, while the one per cent at the top have as much as the fifty per cent at the bottom. Turn- ing finally to the field of taxation, we found that the public is taking as large a percentage from the incomes insufficient for healthful and decent living as from the incomes morally perilous to their pos- sessors, and is placing upon the property of those struggling for an independence burdens fourfold heavier than upon the property of those already rich. Such a review cannot be concluded with the mere recommendation that taxation shall be changed so as to rest equally upon the property of the rich and poor. The equal taxation of property will not restore substantial equality of opportunities. It will not even stop the separa- tion of classes now going on. To accomplish these ends will require radical measures along many lines. For the moment, the reform of the currency and the control of the railroads seem destined to have the first place in the hearts and consciences of those who desire a better social condition. But when these reforms are accom- plished, and the nation sees that the gulf between the classes is still widening, and that the in- comes from great properties, instead of promot- ing energy and thrift, are promoting idleness and waste, there is bound to be a further change in the canons of taxation. In Europe during the present generation we have witnessed the de- 160 THE DISTRIBUTION OF TAXES. mand of liberals for a proportional income tax change into a demand for a progressive income tax. In this country during the coming gene- ration we are likely to see the public demand for the proportional property tax change into an equally vehement demand for a progressive prop- erty tax. The great principles of taxation will not be changed. Taxation will still be distrib- uted according to the ability of each class to bear, according to the public sense of social jus- tice, according to the obvious demands of the public welfare. But the public will recognize that the ability to pay taxes increases faster than the private fortune; the public will feel that the sacrifice becomes less as the size of the fortune grows greater ; and the public will know that the well-being of the nation will be increased by a distribution of public burdens, which will enable the small property owners to gain a competency, even if it seriously reduces the incomes in excess of the demands of comfort or culture or character. The public welfare is the supreme law, and the heart and conscience of the nation are bound to give effect to measures which shall make the wealth of the nation synonymous with the national well-being. APPENDIX I. Distribution of Incomes in England and Wales. 1688. From " The Political Conclusions of Gregory King." AVEBAOU FAMILY IMOOMEB. TOTAL LNG0ME8. 160 26 800 600 3,000 12,000 5,000 5,000 2,000 8,000 10,000 2,000 8,000 40,000 140,000 150,000 16,000 40,000 60,000 5,000 4,000 50,000 364,000 400,000 35,000 Temporal Lords Spiritual Lords Baronets Knights Esquires Gentlemen Persons in offices . . . . Persons in offices . . . . Mercli. and traders by sea . Mercii. and traders by land, Persons in the law . . . . Clergymen Clergymen Freeholders Freeholders Farmers Persons in sciences and lib- eral arts Shopkeepers and tradesmen. Artisans and handicrafts . Naval officers Military officers Common seamen .... Laboring people and out-ser- Tants Cottagers and paupers . . Common soldiers .... Vagrants (30,000 persons) . £ s. 2,800 1,300 880 650 450 280 240 120 400 200 140 60 45 84 50 44 60 45 40 80 60 20 15 610 14 £ 448,000 33,800 704,000 390,000 1,200,000 2,880,000 1,200,000 600,000 800,000 1,600,000 1,400,000 120,000 360,000 3,360,000 7,000,000 6,600,000 960,000 1,800,000 2,400,000 400,000 246,000 1,000,000 5,460,000 2,000,000 490,000 60,000 1,360,586 5,500,520 persons 32 43,505,800 161 162 APPENDIX II. APPENDIX II. Table 1. — Returns in New Domesday Book for the Holdings of Keal Sstate both in Town ajid Country in England and Wales in 1874-1875. London is not included. SIZE OF HOLDINGS. NO. OF OWNEKS. ACKEAGE OF LANDS. GKOSS EST. RENTAL. Less than 1 acre .... 703,289 151,171 £29,127,679 Between 1 and 10 acres . 121,983 478,679 6,438,324 10 and 50 acres . 72,640 1,750,079 6,509,289 SO and 100 acres . 25,839 1,791,605 4,302,002 100 and 500 acres . 32,317 6,827,346 13,680,759 500 and 1,000 acres . 4,799 3,317,678 6,427,552 1,000 and 2,000 acres . 2,719 3,799,307 7,914,371 2,000 and 5,000 acres . 1,815 5,529,190 9,579,311 5,000 and 10,000 acres . 581 3,974,724 5,522,610 10,000 and 20,000 acres . 223 3,098,674 4,337,023 20,000 and 50,000 acres . 66 1,917,076 2,331,302 50,000 and 100,000 acres . 3 194,938 188,746 100,000 acres and upwards . 1 181,616 161,874 No areas 6 448 2,831,452 No rentals 113 1,423 Table 2. — Analysis of the above returns in John Bateman's " Great Landowners of Great Britain and Ireland." 400 Peers and Peeresses Acres, 5,728,979 1,288 Great Landowners (minimum estate 3,000 acres, or £3,000) 8,497,699 2,529 Squires (1,000 acres and upwards to £3,000 rental), 4,319,271 9,685 Greater Yeomen (300 acres to 1,000 acres) . . . 4,782,627 24,412 Lesser Yeomen (100 acres to 300 acres) .... 4,144,272 217,049 Small Proprietors (1 acre to 100 acres) .... 3,931,806 703,289 Cottagers (less than 1 acre) 151,148 14,459 Public Bodies — The Crown-barracks, convict prisons, light- houses, etc 165,427 Eeligious, educational, philanthropic, etc. . . 947,665 Commercial and miscellaneous 330,466 Waste 1,524,624 973,011 owners. Acres, 34,523,974 APPENDIX III. 163 APPENDIX III. Mb. Giffen's Akgument, Journal Statistical Society, 1883. The first evidence I refer to is that of the probate duty returns. Through the kindness of the Commis- sioners of Inland Revenue, I am able to put before you a statement of the number of probates granted in 1881, and of the amounts of property " proved," with which we will compare similar figures published by Mr. Porter in his "Progress of the Nation" for 1838. . . . statement of Number of Probates granted in 1882, with Amounts of Property proved, and Average per Probate [from figures supplied by the Commissioners of Inland Revenue] ; and Com- parison with a Similar Statement for 1838. [From Porter's "Progress of the Nation," p. 600. et seg.] mjMBEK OF PEOBATES. AMOUNT 01' PKOPEKTY. AMOUST OF PEOPEETY PEE ESTATE. 1882. 1838. 1882. 1838. 1882. 1838. England, Scotland, Ireland, 45,555 5,221 4,583 21,900 1,272 2,196 £ 118,120,961 13,695,314 8,544,579 £ 47,604,755 2,817,260 4,465,240 £ 2,600 2,600 1,900 £ 2,170 2,200 2,200 United Kingdom, 55,359 25,368 £ 140,360,854 £ 54,887,255 £ 2,500 £ 2,160 164 APPENDIX III. In spite of the enormous increase of property pass- ing at deathj amounting to over 160 per cent, which is more than the increase in the income-tax income, the amount of property per estate has not sensibly increased. The increase of the number of estates is more than double, and greater, therefore, than the increase of population ; but the increase of cap- ital per head of the capitalist classes is in England only 19 per cent, and in the United Kingdom only 15 per cent. Curiously enough, I may state, it is hardly correct to speak of the capitalist classes as holding this property, as the figures include a small per cent of insolvent estates ; but allowing all the property to belong to the capitalist classes, still we have the fact that these classes are themselves in- creasing. They may be only a minority of the nation, though I think a considerable minority, as 65,000 estates passing in a year represent from 1,500,000 to 2,000,000 persons as possessing property subject to probate duty; and these figures, it must be remem- bered, do not include real property at all. Still, small or large as the minority may be, the fact we have before us is that in the last fifty years it has been an increasing minority, and a minority increasing at a greater rate than the increase of general population. Wealth, to a certain extent, is more diffused than it was. If I had been able to obtain more details, it would have been possible to specify the different sizes of estates, and the different percentages of increase, from which it would not only have appeared whether APPENDIX in. 165 the owners of personal property were increasing in number, but whether the very rich were adding to their wealth more than the moderately rich, or vice versa. But it is something to know, at least, that there are more owners. I trust the Commissioners of Inland Revenue will see their way in their next report to give more detail on this very interestiag point.^ . . . The next piece of statistics I have to refer to is the number of separate assessments in that part of Schedule D known as Part I., viz., Trades and Pro- fessions, which excludes public companies and their sources of income, where there is no reason to believe that the number of separate assessments corresponds in any way to the number of individual incomes. Even in Part I. there can be no exact correspondence, as partnerships make only one return ; but, in compar- ing distant periods, it seems not unfair to assume that the increase or decrease of assessments would correspond to the increase or decrease of individual incomes. This must be the case, unless we assume that in the interval material differences were likely to arise from the changes in the number of partner- ships to which individuals belonged, or from part- nerships as a rule comprising a greater or less number of individuals. Using the figures with all 1 It appears that the increase in the number of probates for less than £1,000 is from 18,490 to 41,278, or about 120 per cent, the average value per probate being much the same; while the in- crease of the number of probates for more than £1,000 is from 6,878 to 12,629, or over 80 per cent, and the average value per probate has increased from £7,150 to £9,200. 166 APPENDIX III. these qualifications, we get the following compari- sons : — Number of persons at different amounts of income charged under Schedule D in 1843 and 1879-1880 compared [in England]. 1 1843. 1879-1880. £ 150 and under £ 200 . 200 and under 300 . 300 and under 400 400 and under 500 . 500 and under 600 . 600 and under 700 . 700 and under 800 . 800 and under 900 . 900 and imder 1,000 . 1,000 and under 2,000 . 2,000 and under 3,000 . 3,000 and under 4,000 . 4,000 and under 5,000 . 5,000 and under 10,000 . 10,000 and under 50,000 . 50,000 and upwards . . . 39,366 28,370 13,429 6,781 4,780 2,672 1,874 1,442 894 4,228 1,235 526 339 493 200 8 130,101 88,445 39,896 16,501 11,317 6,894 4,054 3,595 1,396 10,352 3,131 1,430 768 1,439 785 68 TOTAI, 100,637 320,162 1 The figures for 1843 cannot be given for either Scotland or Ireland. Here the increase in all classes, from the lowest to the highest, is between two and three times, or rather more than three times, with the exception of the highest class of all, where the numbers, however, are quite inconsiderable ; again a proof, I think, of the greater diffusion of wealth, so far as the assessment of income to income tax under Schedule D may be taken as a sign of the person assessed having wealth of some kind, which I fear is not always the case. APPENDIX III. 167 If the owners of this income, at least of the smaller incomes, are to be considered as not among the capi- talists, but among the working classes, — a very ar- guable proposition, — then the increase of the number of incomes from £150 up to, say, £1,000 a year, is a sign of the increased earnings of the working classes, which are not usually thought of by that name. The increase, in this instance, is out of all proportion to the increase of population. 168 APPENDIX IV. APPENDIX IV. The IvriTiiTTiiTm Debt of the United States, 1890. Estimate of Mr. George K. Holmes, the head of the Bureau of Mortgages, Political Science Quarterly, 1893: — Kailroad companies (funded dett) $4,631,473,184 Street railway companies (funded debt) .... 151,872,289 Telephone companies (funded debt) 4,992,565 Telegraph, public water, gas, electric lighting and power companies (estimated) .... 200,000,000 Other quasi-public corporations (to make round total) 11,661,962 Total debt of quasi-public corporations . $5,000,000,000 Real-estate mortgages (estimated) $6,000,000,000 Crop liens in the South (estimated) 350,000,000 Chattel mortgages (estimated) 300,000,000 National banks (loans and overdrafts) .... 1,986,058,320 Other banks (loans and overdrafts, not including real-estate mortgages) 1 ,172,918,415 Other private debts (to make round total) . . . 1,191,023,265 Total debt of other private corporations and individuals $11,000,000,000 Total private debt $16,000,000,000 United States $891,960,104 States 228,997,389 Counties 145,048,045 Municipalities 724,463,060 School districts 36,701,948 Total public debt (less sinking-fund) . . $2,027,170,546 Grand total $18,027,170,546 APPENDIX V. 169 APPENDIX V. Foreign Holdinga of American Wealth. Eespbcting the foreign holdings of American ■wealth, the most careful estimate, perhaps, is that made by'M. Georges Martin, and published in the Journal of the Statistical Society of Paris, April, 1891. It relates only to the securities quoted on European exchanges ; but such securities represent the great body of American property held abroad. The estimate is briefly as follows : — SECURITIES QUOTED EXCLUSIVELY IN EUKOPE. AGGSEGATE VALUE. $694,000,000 EUBOPE 8 8IIAEE OF TEINCIPAL. $694,000,000 EUEOPE'6 8UAEB OF INTEEEST. $34,700,000 267 SECURITIES QUOTED ALSO IN AMERICA. STOCKS AND BONDS, AGGBEGATE VALUE. $3,238,000,000 INCLUDING STATE BONDS. KUBOPE'8 BHAEE OF PEINOIPAL. $1,079,000,000 (min.) to 1,619,000,000 (max.) EUSOPE'S 81IARB OF INTEBEBT. $54,000,000 to 81,000,000 AGGBEGATE VALUE. $735,000,000 FEDERAL BONDS. EUBOPE'S BnABE OF PBINCIPAL. $73,500,000 EUBOPE'S SnABE OF INTEBEBT. $3,000,000 AGGREGATE PRINCIPAL. From $1,846,000,000 To 2,386,000,000 AGGREGATE INTEREST. Prom $ 91,700,000 To 118,700,000 ITO APPENDIX VI. APPENDIX VI. Income of the United Eingdoni, 1885. Mb. Giffbh's Table. (" The Growth of Capital," page 11.) INCOMES. TEAKS' PUKCHASE. CAPITAL. Under Schedule A — Lands Houses Other Profits . . . . Schedule B — (Farmers' Profits) . . . Schedule C — (Public Funds less Home Funds) Under Schedule D — Quarries Mines Iron "Works Gas Works "Water "Works .... Canals, etc Fishing Market Tolls, etc. . . . Other Public Companies, Foreign and Colonial Se- curities, etc Kailways in United Kingdom Railways out of United Kingdom £ 65,039,000 128,459,000 877,000 65,233,000 21,096,000 933,000 7,603,000 2,265,000 5,026,000 3,260,000 3,546,000 018,000 590,000 34,789,000 9,859,000 33,270,000 3,808,000 26 15 30 8 25 4 4 4 25 20 20 20 20 20 20 28 20 £ 1 1,691,313,000 1,926,885,000 26,310,000 621,864,000 527,400,000 3,732,000 30,412,000 9,060,000 125,650,000 65,200,000 70,920,000 12,360,000 11,800,000 695,780,000 197,180,000 931,560,000 76,160,000 Forward 386,271,000 6,923,586,000 APPENDIX ri. 171 Income of the TJnited Kingdom, 1886 (Continued), INCOMES. YEAES' PUKCHASE. CAPITAL. £ £ £ Forward Interest paid out of 386,271,000 6,923,586,000 Kates, etc 5,041,000 25 126,025,000 Other Proijts . . . . 1,435,000 20 28,700,000 Trades and Professions, one-fifth of Total In- come of £180,000,000 . 36,096,000 15 541,440,000 Total under Income-tax, 428,843,000 . . . 7,619,751,000 Trades and Professions ^ omitted, 20 per cent of Amomit assessed, or £36,000,000, of which 7,219,000 " 2 960,000 15 15 108,285,000 14,400,000 one-fifth is J Income of non-Income Tax-paying Classes de- rived from Capital . . 67,000,000 5 335,000,000 Foreign Investments, not in Schedules C andD 50,000,000 10 500,000,000 Movable Property not yielding Income ; e.g.. Furniture of Houses, "Works of Art, etc. . . . . . 960,000,000 Government and Local / Property, say . . . • • • 500,000,000 554,022,000 10,037,436,000 1 This is the result of capitalizing lands, in Ireland at 15 years' pur- chase, and in England and Scotland at 28 years* purchase. 2 Estimate of income escaping assessment by raising of limit of exemption in 1876. 172 APPENDIX ril. Sa ■ OS o" O iH CO lO CO 00 OS rHOO(M»Ci(MO^ ^B g 1— ( g SBS. 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C CO S '^ rO r^ ^ r^ r^ r^ r^ -li rQ C« ^ O <^ o o S O o Q O O C t. o o g )0 't3 tH lO O lO o o el 1-1 CI lO o iH APPENDIX X. 179 'a s fi a p m jZj ■g [^ is ^ W PM 73 <1 .S i^ ?3 )OCOT-ICOO^iH(MC0100SeOOi CD OT CO Cf m" lO 'S Cp t ?0 TdH rH lOIMOl— tHCD-^COtH 00 OS T-1 (M 115 rH t- »0 CO t-OOfc-01Cp010rHlO{MCOO r-ICOO:i^CJ«>eOCO'* ^ ira O Q O O Q o (N i£3 O O O O O ri CI CO ■* 10 180 APPENDIX X. s .8 M M "A W Ph 'Xi 1=1 o PI ID PI O O iH 10,162 3,947 509 iH ■^ t- 00 I 00 1H cq m 00 »0 r-T m eo 00 1 00 §1" co- CO in m a t3 § O > 1 o O) CO _ b- d iH ■* OO -* O^ ^ Oi CO 00 t- 00 ril^ rH_ «r CO" lo" r-l JO OO INDEX. Agriculture, total product of, 96 ; wages In, 115-117. Aldrich, Senator, his report on wages, 105 et seq. Arnold, Arthur, cited on con- centration of land, 1. Basel, distribution of prop- erty in, 74, 75 ; taxation in, in 1881, 74, 75, 85-87; distribution of incomes in, 85-87; shares of capital and labor in, 87 ; taxation in, in 1429, App. VIII. Bateman, John, quoted on distribution of land in Eng- land, in 1874-1875, App. II. Baxter, Dudley, quoted, 75. Booth, Charles, quoted, 76. Capital, amount of, in the United States, in 1890, 125-128; amount of, in England, in 1885, App. VI. Capital and labor, relative shares of, in Basel, 87, 88; relative shares of, in Prance, 88; in Saxony, 89; in the United Kingdom, 90-92 ; relative shares of, in American manufacto- ries, 97, 98; in American railways, 98, 99; relative shares of, in the United States, 119, 120. Commons, enclosure of, 8. Currency, see gold. Debt, minimum, in the United States, in 1890, App. IV. Debt, public (English), small until 1756, 8; increase of, during Napoleonic wars, 12; (American), amount of, in 1860, 40; amount of, in 1865, 40. Domesday Book, New, quoted 7, App. II. Employment, average num- ber of days per annum, in Massachusetts, 101 ; in Illi- nois, 101 ; in England, 102. Farms, value of personalty on, 5, 48, 149, 155; owned and rented, 53. 181 182 INDEX. Griffen, E., argument that in- equalities of wealth are lessening, 15 et seq., 93, 94, App. III. ; quoted on rela- tive shares of capital and labor, 90-92; quoted on capital and incomes in England, App. VI. Gold, change in value of, in 16th Century, 5 ; during the Kapoleonic wars, 11, 12 ; since our Civil war, 39, 109-118. Holmes, George K, quoted on distribution of property, 54; quoted on minimum debt in the United States, App. IV. Homes, owned and rented, 53. Incomes, English, distribu- tion of, in 1868, 75; in 1885, 78, 79; in 1688, App. I.; aggregate of, in the United Kingdom, in 1885, 78, "79; in 1881, 92; Parisian, dis- tribution of, 79-83; Prus- sian, distribution of, 83, 84 ; tendency towards concen- tration of, in Prussia, 83, 84; in Basel, distribution of, 85-87; tendency towards concentration of, in Eng- land, 98, 94; aggregate of, in the United States, 103, 104; distribution of, in Bos- ton, 122, 123; classification of, in the United States, 124-129 ; taxation of, in the United Kingdom, general table, App. VI.; Schedule D and E, App. VII. Interest, fall to 3% in the 18th Centiuy, 8; rise of, during the Napoleonic wars, 12; average rate of, in the United States, 119, 120. King, Gregory, table of Eng- lish incomes in 1688, 7, App. I. Labor, see capital and labor. Leroy, Beaulieu, quoted on distribution of incomes in Paris, 79-81. Manufactures, total product of, 97; profits in, 98. Mill, J. S., quoted on distribu- tion of wealth, 3. Mortgages, rate of interest on, 119, 120; taxation of, 148, 151, 152; situs of, 152, note 2. Paris, distribution of incomes in, 79-83. Personalty, ratio of, to realty, 5, 149, 150, 151; ratio of, to realty, by classes, 65 ; taxa- INDEX. 183 tion of, 147-155; distribu- tion of, in Baltimore, App. IX. Poor-rates (English), rise of, during the Napoleonic wars, 9 ; reduction of, since 1834, 14. Porter, G. R., argument that inequalities of wealth are lessening, 18. Primogeniture, in Middle Ages, 5; abolished in the United States, 26. Probate Records, in England, 16-19; in New York State, 55-68 ; in Massachusetts, 69, 70, App. X.; in Balti- more, App. IX. Property, tendency towards concentration, in England, 7, 15-19; in the Northern States, 33, 70; in the Uni- ted States, 70; in Basel, 74, 75 ; present distribution of, in England, 22, 23 ; present distribution in the United States, by sections, 44-46; between city and country, 47, 48, 63; table, 69; pres- ent distribution of, in Mas- sachusetts, 51, 52, 70, App. X.; in Michigan, 52; in New York State, 56-65; in Basel, 74, 75; distribution of, in England and Amer- ica, contrasted, 67; tangi- ble, amount of, 48; real and personal, distribution of, 65; private, amoimt of, 127, note 1; American, amount of, held abroad, App. V. See also Eeal Estate, Personalty, and Probate Records. Property owners, number of, in England, 20 et seq. ; number of, in the United States, 06. Prothero, R. E., cited on con- centration of land, 7, 12. Prussia, distribution of in- comes in, 83, 84; tendency towards concentration of incomes in, 83, 84. Puritan immigration, charac- ter of, 24. Railroads, capitalization of, 41 ; capital invested in, 41 ; taxation of, 153, 154. Eeal Estate (English), value of, in the Middle Ages, 5; present distribution of, 20, 21, App. II. ; (American), value of. North and South, 30; distribution of. North and South, 32-34. See also Personalty. Rents, competitive, 5; in Paris, distribution of, 80; ratio of, to incomes, 80, 81 ; in Boston, distribution of, 121-123. 184 INDEX. Savings-banks, depositors in, 57,- 58. Slavery, economic influence of, 29-31. Slaves, property in, concen- trated, 31 ; value of, 39. Silver, see Gold. Taxation, light in the Middle Ages, 6; indirect, estab- lished at the Restoration, 6; indirect, developed dur- ing the Napoleonic wars, 9, 10; indirect, reduced by the repeal of the corn-laws, 14; New England system of, 25; indirect, established by our Federal government, 27; indirect, increased dur- ing Civil war, 34 et seq. ; in Basel, in 1881, 85-87; of property and incomes, com- pared, 134, 135; of dwell- ing-houses, in 1798, 138; of incomes in Europe, 139, 140; of inheritances in Europe, 189, 140; national, sources of, in the United States, 140, 141; of liquor, tow distributed, 141, 156, 157; of tobacco, how dis- tributed, 141, 142; of sugar, 142; of clothing, 142; na- tional, distribution of, 143; of personalty, recent in- crease of, 147, 148, 150; of mortgages, 148, 151, 152; local, distribution of, 157; of incomes in England, App. VII.; in Basel, in 1429, App. VIII. Tax-payers, classification of, in Massachusetts, 51, 52. Unemployed, in Massachu- setts, 100, 101; in Illinois, 101. Wages, in England, 92; in Massachusetts factories, 97 ; in cities and villages, 106, 127; in large and small es- tablishments, 107 ; in urban establishments since 1860, 109-112; in mines, 113-115; in agriculture, 115; in rm-al districts, 127. War, effect of, on wages and interest, 9-13, 38, 39, 109.