Entangled by White Supremacy: Reform in World War I-era South Carolina

Chapter 9. Funding Reform

As South Carolina white reformers pursued their post–World War I agenda, they viewed tax reform as the most fundamental and challenging reform of the era. All other reforms—public education, paved highways, public health, a more humane criminal justice system , and improved social services for the poor, wayward youth, and the mentally ill—involved expanding state services and raising additional state revenue. But by 1920, calls for retrenchment of government spending had grown loud as a reaction to state spending increases that reformers had championed during Governor Richard Manning’s administration, which coincided with the war years. From 1914 to 1919 the state spent more for education, the state mental hospital, highway development, and higher pensions for Confederate veterans (see table 1).1 Since South Carolina’s revenue came overwhelmingly from property taxes, increased spending meant higher property taxes. South Carolinians who experienced these escalating property taxes during the war years had begun to urge retrenchment . Reformers advocated tax reform to prevent a tax revolt. Without tax reform, state revenue might stagnate or even decline. To salvage recent improvements in education and other modest reforms and to pursue a broader progressive agenda, South Carolina needed a more diverse tax structure. The structure reformers promoted would shift the tax burden away from agricultural property, allow the state to tax property according to its income-generating capacity, and tax income not raised directly from property ownership. Cognizant that tax reform was foundational for other reforms and convinced of the urgency to reform the tax system as a means of combating demands for tax reduction, reformers faced a daunting Funding Reform 223 Chapter 9 1914 1915 1916 1917 1918 1919 Administration Executive $125,270 $143,850 $161,855 $178,185 $205,448 $193,487 Judicial 107,545 106,920 112,395 130,295 124,836 155,208 Legislative 62,804 62,562 61,706 62,450 63,458 72,195 Tax 92,746 106,246 111,879 106,213 110,713 157,517 Debt Retirement 259,033 261,033 260,044 221,729 222,849 222,289 Confederate Pensions 261,600 300,000 300,000 300,000 299,800 400,000 Prohibition Enforcement 90,000 25,000 22,809 Education Higher 327,777 347,215 334,969 376,330 519,608 680,206 Public Schools 251,500 286,500 303,500 444,100 503,600 524,602 Smith-Lever Fund 31,382 41,843 54,919 67,995 Social Services Mental Hospital 312,881 459,700 418,000 575,000 616,496 695,402 Public Health 45,220 57,676 58,575 77,176 105,241 139,449 Institutions: Corrections and Humanitarian 113,751 110,155 116,533 134,304 261,115 358,652 Other Expenses 186,126 221,902 215,302 251,880 263,047 202,872 Total Appropriations $2,146,253 $2,463,759 $2,486,140 $2,989,505 $3,376,130 $3,892,683 Table 1. Appropriations from the South Carolina General Fund, 1914–1919 Source: Appropriation bills, Acts and Resolutions of the General Assembly of the State of South Carolina, 1914–1919. Funding Reform 225 challenge. South Carolina’s tax system facilitated the undervaluing of assets, empowered local authorities to protect local wealth, and enabled some forms of wealth to escape taxation completely while the revenue burden mounted on others. Mustering political support to reform a system that so effectively protected entrenched interests would be difficult, especially since the proposed tax reforms would be reaching into the pockets of the most affluent and powerful South Carolinians, who would forcefully resist such intrusions. Reformers had to take on these powerful interests, many in their own political coalition, because wealth was neither abundant nor widespread in the state. Taken together, South Carolina’s poorly educated population , its low per capita wealth, and its economy that heavily depended on cotton agriculture, textiles, and Charleston commerce left the state saddled with a small and slow-growing tax base. In the World War I era, South Carolina’s economic and social problems, many of them interrelated, defied easy solutions because of their sheer magnitude . In addition to the barriers that reformers recognized, there was also the ubiquitous but less obvious obstacle of white supremacy. As reformers undertook the challenge of enlarging the state coffers , they had not fully grasped that white supremacy, which they unequivocally supported, would complicate their tax reform goals. Indeed, white supremacy provided a...