The 1870s and 80s was a period of political corruption -- on local and national levels. Bribery in government was common. Business consolidation, monopolies and trusts were rampant, as financial wizards and industrial giants gained a stranglehold on the American economy. One per cent of the population owned more than 99% of the nation's wealth. A depression, which began in 1873 and lasted for several years, had widened the gulf between rich and poor. It was in this setting that the reform movement was born.

Why was corruption so pronounced during this period? Were the politicians and businessmen of the day just particularly nasty people? Probably not. Historical and economic forces converged to provide unprecedented economic growth. This growth was fueled by a few key industries -- such as railroads, electric power, steel and timber -- which led to tremendous profit-making opportunities. Also, the bargaining position of labor was weakened by the closing of the frontier. The central political debates of the day surrounded the plight of the worker, pitted against the huge business conglomerates.

Reformers of this era reacted to corruption and wealth concentration by advocating all manner of proposals, such as socialism, laws controlling business, more powerful labor unions, anarchy, more charitable efforts, religion, temperance, and others. There was plenty of grassroots political action. The Populist party took root and the advent of Progressivism was only years away.

The Temperance Movement One of the great many social movements of the reform period was the Temperance movement. Adherents thought that alcoholic drink destroyed the character of workers and created poverty. Herbert S. Bigelow, a Presbyterian Minister and a supporter of Henry George's ideas, had this to say about the economic effects of temperance: Destitution with sobriety may be quite as merciless a form of misery than poverty with drunkenness, for a man would be denied even the consolation of the Scripture which said, "Let him drink and forget his poverty, and remember his misery no more." This is the great paradox. Just as the owner of the field can appropriate the lion's share of machine-assisted labor, so will even sobriety increase rents more than it will increase wages… We have an economic system which enables the owners of the earth to absorb the advantages of moral as well as material progress. Prohibition may improve the moral character of men, but it cannot touch the economic causes of poverty. There is as much chance to repeal the law of gravitation by an ordinance of the City Council as to abolish poverty by a prohibition of the liquor traffic.

In general (although these terms were not in use at the time), the a "left wing" distrusted competition and market economies, and advocated intervention on behalf of the downtrodden worker, while the a "right wing" argued that the free market was the most efficient and prosperous system, and "the business of America is business." But one important voice of the reform period, Henry George, offered an analysis that differed from both the right-wing and left-wing views.

In 1879, Henry George wrote Progress and Poverty, a book based upon an inquiry into the cause of depressions and of increased poverty during periods of increased wealth. The book's initial impact was significant. Tens of thousands of workers read it. Unions, especially the Knights of Labor (the strongest combination at that time), were strongly influenced by the book's message.

George felt that social conditions, and not hereditary factors, were responsible for humanity's economic ills. Social Darwinism, a popular theory of the period, held that the rich are successful because it is simply in the nature of things: the law of the jungle. Legislation cannot change such a law of nature, such theorists believed, for that will upset what nature has mandated. George refuted this view, holding that society's institutions are responsible for poverty, and that the institution of land ownership is at the very heart of the problem.

Land -- all the natural resources -- is the warehouse of all potential wealth. No wealth can be produced unless one has access to land. But land is owned by the few, while the many are forced to pay the few to make use of it. Vast acreage is held out of use for speculative purposes; landowners wait until the price rises. The result? Most of the population is forced into crowded quarters, having to compete with each other to earn a bare living. George's proposed remedy was to remove the current tax system, and to collect the value of land for public revenue. The reform, which came to be comonly known as the "Single Tax", would have the result of loosening the economic shackles imposed by land owners, many of whom are also industrialists. Natural resources would become available to all. With such a tax system in place, it would no longer be possible to profit from merely owning land. Land which had been held out of use for speculation would thus be made available.

George held that the rental value of land is a value that the owner of land does not create; that value comes from the activity of the whole community. So, land value is the naturally appropriate source of the funds that are needed by the community, to provide public services. Because that proper fund is not collected, wrote George, government must resort to taxes on labor (such as income taxes) and on wealth (such as sales taxes, and taxes on buildings). But such taxes increase the cost of the goods that people need. A land tax would allow them to be removed, encouraging production, and creating jobs.

Progress and Poverty catapulted Henry George into the limelight. He emerged as one of the most influential of the reformers. Politicians, economists, scientists -- leaders from all fields -- were influenced by his analysis of poverty and its relationship to progress.

However, while other reforms were enacted, such as antitrust legislation, laws prohibiting child labor and mandating worker safety standards -- and labor unions succeeding in improving the lot of many industrial workers -- the Single Tax was never adopted on a large scale. Perhaps this was because it was neither "right-wing" nor a "left-wing" -- and so could not rouse the passionate support that was given to those more conventional ideas.

Background Questions:

1. What were some of the solutions offered by reformers during this period?
2. Discuss the impact of Henry George and his book Progress and Poverty.
3. Why is land a crucial element in George's analysis?
4. According to George, how would the "Single Tax" affect production and wages?
5. How did his solution differ from those of other reformers?
6. What are some of the reasons given for the causes of poverty today?