The Government Had Better Ideas for Fixing Income Inequality 100 Years Ago

Then, again.
Feb. 15 2012 6:50 AM

Radical Solutions to Economic Inequality

If only Americans today were as open-minded about leveling the playing field as we were 100 years ago.

120214_HIS_taft
William Howard Taft, 27th President of the United States and 10th Chief Justice of the United States.

United States Library of Congress

A century ago, in one of his last acts of office, President William Howard Taft attempted to solve the problem of inequality in America. In August 1912, on the cusp of a brutal third-place finish in the presidential election, he created a Commission on Industrial Relations to investigate “the general condition of labor in the principal industries.” Despite its fusty charge, the commission turned out to be one of the most sensational sideshows of the Progressive Era, a cross-country journey through the wilds of American class conflict. For three years, government commissioners traipsed from city to city asking capitalists, union organizers, and reformers what it was like to work in America, and whether the spoils of industry seemed to be distributed fairly among the rich and poor. 

The commission’s answer, released in a 1916 report, speaks volumes about the persistent dilemma of inequality in the United States, and about the intellectual timidity of today’s political responses. “Have the workers received a fair share of the enormous increase in wealth which has taken place in this country…?” the report demanded. “The answer is emphatically—No!”

Their numbers bore this out. According to the commission, the “Rich”—or top 2 percent—owned 60 percent of the nation’s wealth. By contrast, the “Poor”—or bottom 60 percent—owned just 5 percent of the wealth.

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Today, after a century of ups and down, we’ve landed back at those extremes, give or take a few percentage points. But what’s striking about the commission’s report, read from a 21st-century perspective, is how limited our own debate about inequality seems by comparison. For the commission, inequality was a fundamental problem that threatened the entire fabric of American democracy. Today, by contrast, we’re busy debating whether a multimillionaire like Mitt Romney ought to pay a few more percentage points in federal taxes.

The driving force behind the commission’s creation in 1912 was, to put it bluntly, fear: If something wasn’t done, even tepid progressives agreed, the country was looking at a period of sustained social chaos, or worse. Evidence of a broken system seemed to be everywhere and went far beyond the sorts of peaceful protests and encampments that have roiled today’s 1 percent. On the West Coast, the Bridge and Structural Iron Workers were blowing up nonunion bridges and work sites. On the East Coast, the radical Industrial Workers of the World were actually winning strikes. In New York in 1914, thousands of people turned out for a rally in Union Square to mourn the deaths of three anarchists who had blown themselves up attempting to build a bomb aimed at John D. Rockefeller Jr., the country’s richest man.

To capture what this all looked like from the top, the commission turned to the words of Daniel Guggenheim, one of dozens of industrial titans asked to weigh in at its public hearings. In a decidedly un-Romney-esque concession, Guggenheim thanked his lucky stars that labor organizers and government reformers had stepped in to help where capitalism had failed. “If it is not for what has been done and what is being done,” he concluded, “we would have revolution in this country.”

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