Tax Preference As White Privilege in the United States, 1921–1965
Whiteness is also a matter of what is behind, as a form of inheritance, which affects how bodies arrive in spaces and worlds. We accumulate behinds, just as what is behind is an effect of past accumulations.1—Sara Ahmed
Inequality—in income, wealth, opportunity, consumption, health, security, political voice, and environment—presents the most pressing social challenge of our day. And it counts among the hottest areas of research in the social sciences.2 Capitalism may tend towards inequality, [End Page 92] as economist Thomas Piketty's exhaustive account suggests.3 Even so, the historical record makes it plain that public and private policies shape distributions of income, wealth, and wellbeing.
This article examines the history of one particular policy that has contributed substantially to the concentration of income and wealth among the richest households—almost entirely white—in the United States: the preferential tax rate for capital gains. Since 1922, the IRS has allowed taxpayers to keep a greater portion of the gains they make from investments (so-called capital gains) than they keep from their wages and salaries (so-called earned, or ordinary, income). This is because capital gains are taxed at lower tax rate than the same amount of money is taxed when it is earned as salary or wage income (figure 1).4
For nearly a century, the reduced rates levied on gains from investment have undercut the progressivity of the U.S. tax code.5 Because the [End Page 93]
wealthiest households earn the bulk of capital gains every year, this tax break benefits the rich overwhelmingly.6 Between 1922 and 2017, the top 10 percent of the income distribution received, on average, 84.2 percent of all realized capital gains, while the top 1 percent took, on average, 61.1 percent of all realized capital gains in the same period (compared to 38.2 percent and 13.0 percent, respectively, of all other income, excluding capital [End Page 94] gains) (figure 2). In every year since 1922, the tax preference for capital gains added several percentage points to the share of after-tax income taken by the top 1 percent and the top 10 percent of the income distribution (figure 3). Since 1989, the capital gains preference has been the single largest contributor to the rise in after-tax income inequality in the United States.7
This feature of the tax code also swells the bank accounts of the wealthiest because of how it affects the compensation of the highest earners. In the United States, partners in private investment funds (like venture capital, hedge funds, and private equity) often receive compensation in the form of a share of their clients' capital gains (so-called "carried interest"), and therefore, they pay the lesser tax rate. The preference for capital gains also encourages corporate executives to take stock-based compensation, anticipating that future gains will be taxed preferentially. With so much of their income and wealth dependent upon the performance of their company's stock, corporate executives focus on that performance in the short term at the expense of the long-term success of the corporation.8 They funnel corporate resources into pay-outs to shareholders like themselves in the form of dividends and buybacks intended to buoy share prices. Today, "the stock market delivers money from corporations to investors, not the other way around," in the words of economist J. W. Mason.9 The financial sector wields outsized and adverse influence over U.S. corporations, thanks in part to the tax break for capital gains for individuals and households.
Given the overrepresentation of white Americans in the highest reaches of the income and wealth distributions, as well as in corporate boardrooms and in fund managers' corner offices, it comes as no surprise that the households that benefit from the preferential tax treatment of capital gains nearly always are white. In 2016, white households made up 76.6 percent of the U.S. population but collected 93.8 percent of all [End Page 95]
[End Page 96]
realized capital gains (table 1). The capital gains tax preference privileges wealthy white households by allowing them to keep more of their income, which in turn quickens their accrual of wealth and widens the racial wealth gap.10
It is no accident of history that the tax code's preferential treatment of investment gains benefits wealthy whites almost exclusively.11 In the [End Page 97]
midst the Great Depression, the most recalcitrant opponents of President Franklin D. Roosevelt—staunch segregationist southern Democrats in the Senate and the leaders of Wall Street—came together to defend and to expand this tax break. They did so to answer the challenges that the New Deal posed to the supremacy of white wealth. Preferential tax rates for capital gains countered the economic benefits, entitlements, guarantees, and protections that the New Deal delivered to the working class (predominantly, but not only, white workers). The champions of white wealth came to view investors as a constituency that might be mobilized, across the Mason-Dixon line, against the modern liberal state and its threats to economic, political, and racial hierarchies.
These midcentury southern senators and New York City financial [End Page 98] leaders understood themselves as conservatives, to be sure. But as they fought to safeguard the status quo, they laid foundations for neoliberalism. Tax policy was the terrain upon which neoliberal ideas about how the world works germinated in the United States after World War I, took root during the middle decades of the twentieth century, and then flourished after 1978.12 Central to the coherent but flexible set of ideas associated with neoliberalism is the notion that markets organize society best.13 Financial markets and financial actors are understood as singularly important because the prices they generate indicate the value of assets, act as signals for the allocation of capital, and register the health of the economy. Financial markets—ostensibly the most efficient mechanism for distributing resources and risk across society—recycle investors' capital gains into new funding for entrepreneurial enterprises, expansion, and employment.14 By this logic, it stands to reason that capital gains should be shielded from the tax collector.
Today, the preferential treatment of capital gains embodies fundamental assumptions of neoliberal thought, furthers the dominance of finance in our economy, and promotes the concentration of income and wealth at the highest (and whitest) reaches of their distributions. Accordingly, its history sheds light on the long and complex trajectory of neoliberalism in the United States. This history reveals that racial [End Page 99] concerns—specifically, white supremacists' need to rethink their political alliances, reframe their commitments, and remake their tools—gave rise to neoliberal theory and policy that continue to shape the contours of American inequality.15
When the Revenue Act of 1921 introduced a preferred (that is, lower) tax rate for capital gains, it controverted the prevailing consensus about how to treat different forms of income. Originally, the architects of the federal income tax held that income earned from wages and salaries should be taxed less than investment gains and interest.16 But with the passage of the Sixteenth Amendment (1913), all income was taxed according to the same progressive rate schedule. This arrangement lasted through World War I, when income tax rates and the number of American households filing income tax returns rose.17
After Armistice, debates over the future of the federal income tax played out against the backdrop of an economic downturn that sparked inflation, labor strife, racist violence, animosity towards immigrants, and forceful reprisals against socialists and communists. Labor, farmer, and even certain business groups sought to extend wartime innovations in federal taxation, including high tax rates on top personal incomes; these rates hit 77 percent in 1918. They imagined that the revenues collected could help fund progressive responses to roiling social conflict, such as a bonus for veterans or a federal buy-out of the railroads.18 Among conservatives, a number of business associations and some of the first modern anti-tax groups spied in postwar Republican victories an opportunity to press for the elimination of the surtax on "excess" wartime profits, for the establishment of a regressive national sales tax, and for the diminution—or even the elimination—of progressive taxation. Even so, Andrew Mellon (the arch-conservative banker who became treasury secretary under President Warren G. Harding in 1921) called for a lesser tax rate on wage and salary income to spur industry and thrift among the [End Page 100] working classes.19 Finally, a range of commentators charged that the wealthy sheltered their income in tax-free municipal and state bonds, which both deprived the government of tax revenue and starved the private sector of investment funds.20
The Revenue Act of 1921 embodied a compromise. It retained progressive taxation of income but slashed rates. And it honored investors with a preferential rate of 12.5 percent on their capital gains, well below the new top rate of 58 percent levied on income earned from wages and salaries.21 Except for a brief period in the late 1980s, the federal code has included preferred rates for investment gains ever since.
The preference seems to have originated in a proposal made by tax lawyer Frederick R. Kellogg at Senate Finance Committee hearings in 1920. Presenting himself as practical and non-partisan, Kellogg asserted that high tax rates yielded less total revenue for the government (a notion that long predates Arthur Laffer's infamous curve). This was because prevailing tax rates discouraged all kinds of investors from transacting.22 Senators swapped stories with Kellogg. In these tales, beleaguered investors could not transact because they could not afford to pay the taxes due on a capital gain. The homeowner forced to move to keep his job, the "thrifty" worker compelled to sell his "little home" when laid-off, the farmer unable to liquidate his homestead in response to the agricultural crisis, the stockholder who "would not sell at the top of the market because of this tax law," and then watched helplessly as share prices plummeted.23
Kellogg encouraged the assembled senators to believe that these aborted transactions robbed the Treasury of revenue that conservatives might use to retire the national debt or that progressives might spend on recovery programs. He offered an original diagnosis for the postwar recession: despite "enormous demand for fluid capital for many reconstruction purposes," Kellogg explained, taxes "enchained" investors' [End Page 101] "money in existing forms of investment." Kellogg's model subsumed all asset markets within one universal market for investment capital. In this market, the freedom of capital to move in and out of different undertakings—to assume any asset form—determined the state of economy. At present, capital had "frozen" in existing investments, Kellogg claimed.24
Tax relief would thaw these icy obstructions to economic recovery, Kellogg promised. A lesser tax rate on investment gains, he claimed, would benefit any person who owned any type of asset. But the "small investor" in particular required such relief. This investor might realize but one such gain in his lifetime, only to see it consumed by taxes when that windfall bumped him into a higher tax bracket in the year of sale. And even before he paid those taxes, inflation would have reduced the real value of his capital gain.25 Defenders of the capital gains tax preference would repeat these same justifications for nearly a century.
Kellogg's model of capital markets resembled arguments that the financial community—especially the New York Stock Exchange—had advanced to repel regulation and taxation in the 1910s. And it drew upon ideas about financial investment that had circulated during the war loan drives of World War I, when millions of Americans had purchased federal war bonds. The liberty bond and war savings campaigns promoted the ideal of a mass-investment society and broadcast a new model of the economy that put investors in the driver's seat.26
By now, the receipt of unearned income from gains on investment no longer seemed plutocratic. The Revenue Act of 1921 expressed a new consensus: the tax code should "be trying to protect … the investor," in the words Senator Nicholas Longworth (R-OH).27 Throughout the Roaring Twenties, spokesmen and members of the New York Stock Exchange continued to defend the preferential treatment of capital gains on the grounds that it favored thrifty citizen-investors who turned the wheels of the economy as they realized and reinvested their gains from the sale of investments.28 [End Page 102]
The Great Crash of 1929 called into question the theory that robust returns to investors guaranteed stable economic growth and an equitable distribution of wealth. As the nation slid into the Great Depression, tax revenues plummeted and relief rolls lengthened. Even before Roosevelt took office, the Revenue Act of 1932 hiked tax rates on wage and salary income for top earners. But it left tax rates on capital gains unchanged.
Later on in FDR's first term, revelation exposed that some of the richest Americans had avoided paying income tax, while Senator Huey "Kingfish" Long's "Share Our Wealth" campaign incited demands for economic redistribution. These developments pushed the president to propose tax policies intended to dilute the concentration of income and wealth in American society.29 Such fortunes, Roosevelt explained, allowed "relatively few individuals" to exercise control "over the employment and welfare of many, many others." Saddling the rich with more of "the burdens of the Government" would not "destroy wealth," he promised. Rather, it would "create a broader range of opportunity" and "restrain the growth of unwholesome and sterile accumulations" of wealth.30 In accordance with the president's wishes, the Revenue Act of 1934 raised tax rates on capital gains from 12.5 percent to 31.5 percent. And the Revenue Act of 1935—popularly known as the "Wealth Tax" or the "Soak-the-Rich" tax—hiked rates on upper-most earned incomes and on inheritances and estates.31
Already engaged in a pitched battle against federal regulation of the nation's securities and commodities exchanges, the New York Stock Exchange now rallied against the president's tax program. Rather than restoring opportunity to the masses, NYSE leaders contended, Roosevelt's higher rates and redistributive intentions threatened the "millions of large and small accumulations of capital" saved by "thrifty citizens." Wealth was distributed broadly enough already.32 If that capital stood [End Page 103] idle, tax policy deserved the blame. Only by eliminating capital gains taxation could policymakers provide the "incentive" for "twenty or more million citizens … who own securities of some kind or another" to resume buying and selling, NYSE spokesmen explained.33 Investors' quickened trading would set capital—now frozen in existing investments—into circulation once more. This thaw would release funds for reinvestment in new businesses and factories, leading to more, better, and cheaper goods and services, more jobs, higher productivity, less inflation, faster economic growth, and ultimately, more tax revenue for the Treasury.34
The New York Stock Exchange's economic model anticipated those articulated by supply-siders in the 1970s and 1980s. But at no point could it claim much empirical support. In truth, then as now, when investors trade stocks and bonds, money passes from those who wish to buy those who wish to sell. Corporations and the other issuers of securities receive nothing from these trades (except in an initial public offering). An investor might reinvest a gain from trading stocks or bonds (or selling a home, a business, a barrel of oil, a farm, or a derivative contract) in a new and promising venture that creates jobs and grows the economy. But financial history suggests that investors are just as likely to spend those gains, or to "reinvest" them in existing assets, driving up their prices until a socalled bubble forms. Fiscal history does not support the claim that tax reductions on top incomes—whether derived from wages and salaries or from capital gains—pay for themselves.35
"Restore incentives for private enterprise! Restore confidence to capital!" [End Page 104] roared New York Stock Exchange president Richard Whitney as he denounced the New Deal. Economic recovery "must come in the future as in the past," Whitney advised, "through the initiative of private enterprise, the intelligence of private management, and the courage of private capital" formed out of "the steady investment of the savings of individuals."36 Any "substitute for this way of raising capital" would crush economic freedom. The NYSE particularly objected to federal borrowing to fund the Reconstruction Finance Corporation (1932), the federal agency that kept the economy afloat during the Great Depression by extending loans to banks, railroads, businesses, subnational governments, and farmers.37
Unlike other opponents of the New Deal, the self-proclaimed "citadel of conservatism" did not identify production or even profits as its primary concern.38 Instead, NYSE spokesmen held fast to a model of the economy and a vision of freedom that centered on individual investors and financial markets, specifically, on the liquidity of financial markets.39 To the investor must be restored his "right to change [the] form" his investment took—"as often as his judgment and his perception of the future may suggest"—without the prospect of taxes weighing upon his decision.40 "Continuous liquidity of opportunity" for the investor was "just as important and, socially, just as beneficial as the corresponding right of the farmer to alter his rotation or the working man to change his job."41 Put simply, the investor deserved "a fair rental for the service" that his funds performed "in providing the factories, the materials, and the equipment," without which labor and management could not "produce new wealth."42
Although the Revenue Acts of 1934 and 1935 passed Congress, requests for speakers and information poured into the New York Stock [End Page 105] Exchange from all across the country, particularly from business associations.43 NYSE leaders upbraided audiences for prostrating themselves in support of New Deal programs to aid their business, region, or sector while a broader assault on their values and their virtues advanced unchallenged. "Collectivism" threatened to "thrust aside initiative and the rugged desire for individual attainment and progress," that "old individualism which brought the United States to the forefront of nations."44 Whether particular New Deal policies aimed to plan production, raise employment, control prices or wages, stimulate consumers' income, or redistribute wealth, they all violated "the freedom of the individual to exercise his unfettered judgment in taking initiative, assuming risks, and adapting himself to changing circumstances."45 At the center of this system of economic and political freedom stood the "continuously liquid security market" embodied by the NYSE, or so it claimed; the prices it generated "governed" the entire "competitive inter-locking arrangement" that made up the modern economy.46
In the mid-1930s, then, the spokesmen of the New York Stock Exchange reframed FDR's attack on wealth inequality as an assault upon thrifty citizen-investors that would trigger, necessarily, systemic failure for both capitalism and democracy. They wagered that their finance-centered "economic philosophy" could invalidate capital gains taxation.
Roosevelt raised the ante. As he campaigned for a second term, he called for a tax on undistributed corporate profits.47 "Should we permit business to accumulate earnings and keep them idle?" asked Federal Reserve Chairman Marriner Eccles. "That stops the flow of money." If faced with a tax on retained profits, a corporation likely would spend on expansion and hiring, or increase dividend payments to shareholders, who might spend them and thereby stimulate consumer demand.48
Executives of large and small corporations—most of whom had at [End Page 106] least tolerated the New Deal up to this point—now recoiled.49 In their view, the undistributed profits tax posed a dire threat to corporate finances and to the autonomy of corporate executives.50 In the press, in letters to elected officials, and at meetings of trade and industry groups, corporate and financial leaders yowled. What the administration disparaged as "idle balances" were, in fact, obligatory financial safeguards, fuel stockpiled to propel future economic growth.51
Corporate leaders understood that a repeal of the undistributed profits tax meant convincing Congress to replace it with some other technique for rousing motionless money. And this is exactly what the NYSE claimed a reduction or repeal of capital gains taxation could accomplish.52 Prior to this moment, corporate leaders had paid scant attention to the tax code's treatment of capital gains realized by individuals. Those who did often opposed the preference for capital gains as a means by which "stock market operators" amassed "tax free" income and attained "complete control of corporations."53 Now the issue of capital gains taxation moved to the forefront of business opposition to the New Deal—just in time for American voters to return FDR to the White House by the largest margin of victory in any presidential election to date.54 [End Page 107]
The landslide set a turn in motion, both for the New Deal and for its critics. After Roosevelt's re-election in 1936, NYSE arguments about the importance of free-flowing finance—supposedly blocked by taxes on capital gains—found a receptive audience not only among executives looking to discredit the tax on undistributed corporate profits, but also among the president's foremost adversaries in Congress. These "irreconcilable" southern Democrats who controlled the Senate Finance Committee stood, above all else, for the political rule of white wealth in the South and in the Senate. The tax code's preferential treatment of capital gains income buttressed that cause; the discourse surrounding that preference masked how it undermined progressive taxation. Determined to derail Roosevelt's agenda and to thwart the transformation of the Democratic Party, the irreconcilables organized the first bipartisan alliance against the New Deal in 1937. With the Revenue Act of 1938, this early conservative coalition reduced rates on capital gains and repealed the undistributed corporate profits tax over the president's objections.
Senator Josiah W. Bailey (D-NC, 1931–1946) and Senator Harry F. Byrd (D-VA, 1933–1965) gained their seats on the Senate Finance Committee thanks to the decisive electoral victories won by the Democratic Party in 1932. There, they joined fellow irreconcilable Senator Walter F. George (D-GA, 1922–1957). When these senators took up the agenda of the New York Stock Exchange beginning in 1936, it was an unlikely association. After all, southerners strongly supported progressive taxation of income to replace the tariff that had been borne heavily by the South and West in the nineteenth century.55 Political thinkers in the South tended to view Wall Street institutions as instruments of northern domination over their credit-strapped region. Southern congressmen had ignored the vociferous objections of the NYSE when they voted in favor of the Securities Act (1933) and Securities and Exchange Act (1934).56 [End Page 108] Indeed, Senator Carter Glass (D-VA)—a key figure in Byrd's mighty political machine in Virginia—had authored the eponymous law that separated commercial from investment banking in 1933.57
Senator Harry F. Byrd, Sr.—widely considered the most powerful man in the state of Virginia—could trace his lineage to the foremost planterenslavers of the Old Dominion.58 He largely rejected the New Deal (carefully, however, as programs like the Agricultural Adjustment Administration were popular in Virginia).59 From the outset, Senator Byrd suspected Roosevelt's agenda would destabilize the racial and class hierarchies that he felt honor-bound to protect. And the tremendous increase in federal borrowing violated the pay-as-you-go principle of fiscal orthodoxy that Byrd held equally dear.60 He understood that wealthy whites would bear the taxes required to pay the interest on the debt incurred to fund New Deal programs like the Federal Emergency Relief Administration (1933), the Civilian Conservation Corps (1933), the Agricultural Adjustment Administration (1933), the Public Works Administration (1933), the Tennessee Valley Authority (1933), and the Works Progress Administration (1935). Like Byrd, Senator Walter F. George had opposed FDR ever since the nomination in 1932. And for his part, Senator Josiah W. Bailey acceded to the economic agenda of the early New Deal at first. He recognized the urgent need for relief and employment; he believed it would hasten the development of North Carolina.61 But increasingly, Bailey perceived a worrisome "trend towards reliance on public aid for everything." He fretted that Roosevelt's tax program would limit "opportunity to create and to save" wealth.62 [End Page 109]
To be sure, all southern Democrats in Congress scrutinized every aspect of the New Deal for compatibility with their system of regional autonomy and racial apartheid. In deference to this formidable group, FDR never challenged Jim Crow directly. New Deal policies and programs—social insurance, labor rights and protections, job programs—benefitted African Americans only in a limited way. They exempted industries in which blacks worked (particularly agriculture and domestic service); they accepted discriminatory local implementation and all-white labor unions. Even so, the irreconcilables concluded at an early date that an expanded federal state that wielded extended economic power presented a serious threat to states' rights and to the rule of white wealth.63
Put simply, the irreconcilables stood for Dixie, and not with the New Deal.64 By the middle of 1936, senators Bailey, Byrd, and George had parted with the president. The ever-increasing levels of federal spending, the Revenue Acts of 1934 and 1935, and the incendiary language Roosevelt lobbed at corporations and the wealthy—all these struck the irreconcilables as inimical to recovery and redolent of the despicable Huey "Kingfish" Long, felled by an assassin's bullet in September 1935.65
Roosevelt's landslide re-election in 1936 raised urgent concerns among the irreconcilables. Their political future—and indeed, the entire social and political regime existing in the South—appeared to face dire perils. Josiah W. Bailey, Harry F. Byrd, Sr., and Walter F. George all hailed from what political scientist Robert Mickey identifies as "pockets of authoritarian rule" characterized by a single political party, the system of racial segregation and terror known as Jim Crow, and the disenfranchisement [End Page 110] of blacks and poor whites alike.66 All three men came of age at the turn of the century, just as white elites in former Confederate states seized ahold of state Democratic parties and crushed agrarian and populist coalitions—including biracial ones—through race-baiting, political violence, and laws that restricted voting to propertied whites.67 "Revolutions are never lawful, but often right," Bailey wrote as editor of the Biblical Recorder in 1898, defending the bloody coup in Wilmington that ended interracial Populist-Republican rule and brought North Carolina under Jim Crow. "This one was as righteous as that which made it necessary was outrageous," for "two unassimilable [sic] races are still trying to occupy one land, and so long as they shall, so long shall the problem loom up hideous."68 White readers would have understood Bailey's allusion to the malevolent myth underpinning Jim Crow: white men must subdue black men's irrepressible urge to rape white women by any and every means.69
As Byrd, Bailey, and George rose to positions of political leadership, first in their home states and then in the U.S. Senate, they dedicated themselves to the interests of New South industrialists and urban elites, as well as large landholders and merchants in the region. Above all else, FDR's irreconcilable opponents stood for maintaining the unchallenged rule of white wealth. Because they sat atop single parties that mixed patronage with voter suppression, the irreconcilables scarcely could be challenged in their home states. Safe in the Senate, they secured important committee positions thanks to majorities held by the Democratic caucus, the southern delegation's unified majority within that caucus, and seniority rules.70
Even so, by 1936 the irreconcilables spied cracks forming in the foundations of their rule. The "long civil rights movement" was well underway.71 [End Page 111] During and after the Great War, black soldiers and veterans demanded their rights while black workers rode the waves of the Great Migration to the industrial North and Midwest. In the decade after Armistice, the agents of Jim Crow responded by escalating their campaigns of white supremacist terror against black southerners, even as southern communists launched the first campaigns for full social and economic equality between whites and blacks. When members of the communist National Textile Workers' Union walked out in Gastonia, North Carolina in 1929, it marked the first attempt at interracial organizing in the region. In 1931, the well-publicized Scottsboro trial drew worldwide attention to Dixieland's violent, anti-democratic regime; it attracted significant numbers of African Americans to the Communist Party for the first time.72
President Roosevelt treaded carefully to avoid antagonizing the authoritarian enclave rulers and their delegates in Congress. In accordance with the racist commitments of all southern Democrats, the New Deal's programs of relief, employment, and lending were administered locally in ways that buttressed racial segregation.73 Nonetheless, the irreconcilables believed that all these programs built competing networks of patronage behind the president at the expense of local enclave rulers and their political representatives, even as they added to the federal deficit and to the tax burden of well-to-do whites.74 If emboldened by federal largesse, poor whites might push back against enclave rulers—and perhaps even against segregation—or so the irreconcilables feared.75
If they had forgotten these truths during the flurry of FDR's first one [End Page 112] hundred days, the nation-wide textile strike of 1934 served the irreconcilables a rude reminder.76 The National Industrial Recovery Act (1933) and the National Labor Relations Act (1935) established workers' right to organize and to join unions, although those employed in agriculture and domestic service (that is, black workers) were excluded largely. Once these laws passed, white workers poured into southern labor unions. In 1934, hundreds of thousands of mill hands in the all-white United Textile Workers shut down textile factories from Maine to Alabama, calling for union recognition and collective bargaining.77 The strike ended in defeat. Still, it impressed upon the irreconcilables that New Deal covenants with Jim Crow would not be enough to preserve the system of low-wage labor upon which southern manufacturing and enclave rule depended.78
Other ominous signs appeared in Dixieland. Beginning in 1935, growing numbers of liberals, socialists, and communists—white and black—came together in a southern Popular Front to fight fascism in the forms of Jim Crow and Nazism. Condemning Jim Crow outright, these new interracial groups demanded "immediate social, economic, and political equality" for African Americans and full integration, according to historian Glenda Gilmore. The University of North Carolina, Duke University, and Shaw University all became "hotbeds of agitation" in Senator Bailey's home state after black applicants to all-white graduate and professional schools mounted the first legal challenges to separate-and-unequal systems of education. And in Raleigh, Jonathan Daniels—the son of Josephus Daniels, who had played a key role in disenfranchising African Americans in North Carolina in 1900 and later served as Wilson's secretary of the Navy—gave voice to a "new generation of white southern liberals" who "began, ever so slowly, to support desegregation." After inheriting the News and Observer, the younger Daniels challenged Bailey in the 1936 primary.79 [End Page 113]
Developments within the national Democratic Party also alarmed the irreconcilables. In 1934, Senator Robert F. Wagner (D-NY) and Senator Edward P. Costigan (D-CO) answered the NAACP's call for an anti-lynching bill—the first of dozens that southern senators would filibuster.80 At the Democratic National Convention in 1936, the party abolished its rule requiring a two-thirds vote to nominate a candidate for president, which long had assured that the southern delegation held veto power over the party's presidential contender.81 Subsequently, the popular votes that delivered Roosevelt's resounding re-election came from members of unions that belonged to the new, racially-integrated Committee for Industrial Organization (after 1938, the Congress of Industrial Organizations, or CIO), which supported civil rights for African Americans. These voters—blacks and white ethnics—built up party ranks in the industrial North and Midwest, but their very existence desecrated the irreconcilables' devotions to racial apartheid and low-wage labor.82 Rumors circulated about national party leaders "forming an organization of Negro Democrats" in the South.83 Then, after his second inauguration, Roosevelt proposed to pack the Supreme Court—traditionally a bulwark of support for low-wage apartheid—with six new judges more favorably disposed to his agenda.84 With this move, FDR confirmed the irreconcilables' fears of overreach by the executive branch of the federal government.
The irreconcilables now despaired over the future of their beloved party. Would it allow Roosevelt to reach even deeper into the South, disrupting the authoritarian enclaves with programs of relief, regulation, or redistribution? Would the national party continue to tolerate the concentration of federal power in the hands of a chief executive who spoke [End Page 114] like Huey Long and harked to the counsel of former Republicans like Harold L. Ickes, John L. Lewis, and Henry A. Wallace?85 Once the president of the Chicago chapter of the NAACP, Secretary of the Interior Ickes had directed the Public Works Administration to desegregate facilities in the national parks system.86 John H. Lewis now stood at the helm of both the United Mine Workers and the CIO.87 "It is well understood here that the President is going forward with the view to a new Party," Bailey wrote, "he is looking to get John Lewis to assist him … He is determined to get the negro vote and I do not have to tell you what this means." Bailey concluded with the same innuendo with which he had justified the bloody Wilmington coup back in 1898.88 As secretary of Agriculture—the largest department in the federal government—Wallace, an avowed anti-racist, set his sights on relieving rural poverty, especially in the South.89
If the rule of white wealth were to survive, the irreconcilables would require new stratagems and new allies. When a wave of strikes and a "double-dip" recession hit the U.S. economy in 1937, and as biracial organizing once again disrupted textile mills, ironworks, and tobacco plants in the South, the irreconcilables conferred with conservative Republicans in the Senate and conservative Democrats in New York City, including leaders of the New York Stock Exchange.90 These groups also opposed continued deficit spending, the extension of federal and presidential power, and the ascent of organized labor. They all agreed that [End Page 115] time had come for "private enterprise" to resume its leadership in the economy. And they all identified "a great scarcity of venturesome capital"—due to its "dissipation" by taxation—as the primary obstacle to recovery. Resisting their inclination to balance the budget by raising taxes, the irreconcilables fell in line with their new confederates. Beginning in 1937, they all demanded the reduction of capital gains taxes "to the extent it is necessary to permit capital to become venturesome again."91 In doing so, they introduced the concept of venture capital into the American economic vernacular.
Ties of sociability and marriage, commerce and finance, party and patronage linked the irreconcilables—and the southern elites they represented—to northern and midwestern elites and their sentinels in the Senate.92 Senator Byrd and Senator Bailey had distinguished themselves to leaders of the Democratic Party in New York City when they stood by presidential nominee Al Smith in 1928, even as other southern Democrats abandoned the candidate on account of his Catholicism and his opposition to Prohibition.93 Smith's patron, the former DuPont and General Motors executive John J. Raskob, had proven himself to the irreconcilables when he resigned as chairman of the Democratic National Committee in protest of Roosevelt's nomination in 1932.94 Raskob had tried but failed to spark popular opposition to the New Deal with his ill-fated American Liberty League. Now Raskob and his circle redirected [End Page 116] their efforts towards building alliances across divisions of party and region.95
This circle included wealthy financiers, real estate titans, prominent attorneys, and corporate executives.96 NYSE member John A. Coleman shared Raskob's devotion to the benefaction of the Catholic Church; Pope Pius XI appointed both men as Knights of St. Gregory the Great in recognition of their service and their financial contributions.97 The scion of a New York City real estate dynasty whose leadership in the Democratic Party reached back to James Madison's administration, Senator Peter Gerry (D-RI) nursed outrage over the textile strike that closed his constituents' mills in Rhode Island in 1934.98 Also seated on the Senate Finance Committee, Senator Arthur Vandenberg (R-MI) reached across party lines after the CIO-backed United Automobile Workers won recognition following its members' occupation of the GM plant in Flint, Michigan, during the famous sit-down strike of 1936–1937.99 Vandenberg's ear bent toward some of the most formidable opponents of FDR and the CIO, all of them residents of Michigan: Sewell Avery of Montgomery Ward, Alfred P. Sloan of General Motors, and Henry Ford. Lastly, Senator Pat Harrison (D-MI) decamped to the irreconcilables after deciding that Roosevelt's tax program had acquired a "social or punitive nature" and reached "the point of diminishing the revenue of the government."100 As chairman of the Senate Finance Committee (1933–1941), Harrison had steered important New Deal legislation through Congress. His defection delivered a serious blow to the administration.101
"We must have an end of this business of one man denouncing regimentation, [End Page 117] another denouncing Congress, another denouncing the President, another protesting against the tariff, and so on and so on," Senator Josiah W. Bailey wrote.102 With the "Declaration of Principles"—dubbed the "Conservative Manifesto" by the press—Bailey and Vandenburg offered a "definite rallying ground" to New Deal opponents, no matter their party affiliation.
Released in December 1937, the Conservative Manifesto identified "investment of private savings in enterprise" as the economic function that must "be depended upon and, without delay, heartily encouraged by the public policy." Number one on the list of demands stood the reduction of capital gains taxes "so as to free funds for investment and promote the normal flow of savings into profitable and productive use … in expanding business, larger employment and more active consumer demand for goods." By bursting this dam against savings and investment, legislators could reinvigorate "self-dependence" and revive "natural impulses of kinship and benevolence" toward the "deserving" poor and unemployed. Public relief must revert to "local responsibility" in order to guarantee "non-political administration of funds" on a "non-partisan and temporary" basis. Bailey and Vandenburg also stipulated the "maintenance of States' rights, home rule, and local self-government," the reduction of federal spending to achieve a balanced budget, "the maintenance of law and order" in labor relations, and the end of all "government competition with private enterprise and investment."103
With this wholesale rejection of the modern liberal state, the Conservative Manifesto charted a path for modern conservatism for the next half-century, at least.104 But even as Bailey and Vandenburg wrote to unify the opponents of the New Deal, they anticipated neoliberal thinking: they identified investors and financial markets—not production, profits, employment, or consumption—as the wellsprings of economic recovery and growth and as the safeguard against the concentration of economic and political power in the hands of organized labor or within the federal state.
The Conservative Manifesto failed to rouse Congress. But it drew [End Page 118] attention from the press. Bailey came out swinging against the New Deal for increasing taxes, wages, and the prices of commodities while diluting the currency, devaluing the dollar, and discouraging "business and industry." Recovery "must be based upon wealth created, and not upon money borrowed," Bailey insisted. "Some would always postpone the day, but now is the time," lest the "'land of the free, the home of the brave'" degenerate into "the land of the dependent, home of the weak."105
The Conservative Manifesto electrified the irreconcilables' supporters, whose ranks grew.106 The New York Stock Exchange circulated two million copies of the Conservative Manifesto to investors and shareholders through its members' firms and its listed corporations.107 Bailey's office was flooded with letters pledging solidarity from across the country, written by owners of businesses large and small, corporate leaders, economists, business journalists, and financiers, along with many individuals identifying as small investors.108 The president "forgets there are millions of people in this country counting on dividends and there are a great [End Page 119] many small stockholders," one constituent wrote.109 A Chicagoan concurred that "no one wants to invest money if he is going to have a gang of meddlers after him all the balance of his life, who will destroy his investments" with taxation under the pretext of "being 'socially minded.'"110 And from Freeport, New York, Thomas Horace Evans echoed the irreconcilables' fearsome predictions. The "agencies" behind "confiscatory" capital gains and inheritance taxes would "next move" to "reform the South," Evans divined. "The Negro will become an important feature in politics … the South will suffer."111 Even beyond the irreconcilables' circle, then, many now apprehended that the preferential treatment of capital gains must be defended as a bulwark of white wealth and white supremacy.
The president hit back with even bolder plans of progressive taxation. He took steps to encourage the opponents of the enclave rulers and their irreconcilable envoys in the Senate. In August 1938, a presidential advisory committee that included leaders of the CIO released a Report of the Economic Conditions of the South. The report identified Dixieland as the nation's "number one economic problem" and blamed labor-market segregation for depressing the wages and purchasing power of blacks and whites alike in the region.112 And FDR campaigned against the re-election of southern Democrats whom he considered disloyal, particularly Senator Walter F. George of Georgia. But when the president characterized southerners as "educationally behind the rest of the nation" and "peculiarly susceptible to the demagogue"—likening Dixie to a "feudal" and "fascist system"—the irreconcilables' clients and patrons blanched.113 NYSE speakers traveled south to attack Roosevelt and to defend the irreconcilables, who quickly resumed their offensive against the New Deal. [End Page 120]
Senator Josiah W. Bailey fumed. The president had crossed a line when he presumed "to interfere in the Southern states, to appraise and solve the problems of the Southern people."114 Much like during the days of "Reconstruction," the administration sent "armies of so-called uplifts" to "meddle" in southern "affairs, racial and social."115 The South would mind itself, Bailey swore. Capital and manufacturing flowed into the region to escape the rising wages and the labor militancy roiling the North and Midwest.116 "We will give a hearty welcome to capital," Bailey allowed, but southern elites "insist on supplying the labor" on conditions that respected southern traditions. The region reserved the best jobs for the white population, "native born for from six to ten generations." Bailey's vision discarded all those whom the CIO represented—that is, black workers and non-Protestant white ethnics alike.
We have not been afflicted with the European proletarian migration. Our ideas and ideals are Saxon … we solve the labor question as the English solve theirs … we do not want the sort of population we hear of in New York, Pennsylvania, Illinois, Massachusetts, the melting-pot population [with] no affinity for true American republican institutions—who give themselves over to the influence … of agitators whose names end with "ski" and "stein"—to Dubinskis and Brophys. Our people have the Saxon capacity for order, they have no affinity for agitators, they are not sit-down strikers … [they cherish] English liberties, the common law and the Bible.
"As for our race question," Bailey continued, "we do not intend that Northern politicians shall have a hand in it. We propose ourselves to solve our problems, economic, social, and racial in the Southern way."117 Perhaps "negroes" had seized "the balance of power in certain Northern states," but "it must not happen here," Bailey warned. "We will always have a white man's party in the South," he vowed, "we will not permit the Northern Democrats to frame a race policy or any social policy."118 [End Page 121]
FDR's attempt to purge the irreconcilables backfired.119 Senator Josiah W. Bailey read the midterm results as a signal that voters wanted "no more borrowed money but substantial recovery based on sound public policy encouraging the investment of private savings in business and industry."120 When the Senate reconvened, the irreconcilables trounced anti-lynching legislation. And the Senate Finance Committee moved to eliminate the tax on undistributed corporate profits and to secure a steep tax reduction for capital gains.121
President Roosevelt threatened a veto. The tax code "ought to encourage men to venture and to build up new productive wealth," he allowed. But slashing tax rates on capital gains would only "help those who make the large profits in buying and selling existing stocks."122 According to a study conducted by the Treasury Department, fully "eighty percent of capital gains" were "made in the stock market" and "not by developing new companies" as the irreconcilables and their supporters claimed. "Are you putting new capital into these companies?" FDR queried the press corps. "No, you are only transferring ownership from A to B. That is not putting new money to work."123 At issue for the president was not simply the correct diagnosis for the so-called "double-dip" recession that had hit the economy, nor even the best path to recovery. Rather, for Roosevelt, "equal taxation of incomes of similar size" stood as the "axiomatic" attribute [End Page 122] of progressive taxation. It stood as "a moral principle," as well.124 As "desirable as it is to foster business recovery," the president scolded, "we should not do so by creating injustices at the expense of the man who earns his income" and "advantages [for] the man who does not."125
In response, Senator Arthur Vandenberg (R-MI) swore, "I shall not yield to the President's demand for a tax on thrift and prudence, which is at least partially responsible for today's chaos. I prefer the route which leads to recovery as charted by both Senate Democrats and Republicans alike"—that is, the reduction of tax rates levied on capital gains.126 The Revenue Acts of 1938 and 1939 accomplished just that.
The climax in the fight over capital gains taxation—and the ideas and coalition that gave rise to it—turned the tide against the New Deal, marking the end of its most robust period of reform.127 For the remainder of Roosevelt's presidency and for more than two decades after, the irreconcilables commanded a conservative bloc in Congress that checked liberal efforts to restructure the economy further, to enlarge social benefits, or to extend even basic federal protections to African Americans.128 When the irreconcilables rolled back taxes on capital gains, they managed to buoy existing white wealth and to undercut the progressivity of the income tax code. From the end of the Second World War until the mid-1960s, the share of total wealth held by the top 1 percent and top 10 percent in the United States—an almost exclusively white group—stabilized just under 30 percent and just over 70 percent, respectively.129 In Europe, by contrast, wealth inequality continued to decrease into the 1970s.130 [End Page 123]
To preserve the political rule of elite whites, the irreconcilables hardwired the preferential treatment of capital gains into the fiscal machinery of the same modern liberal state that they so abhorred. And as they trimmed away at modern liberalism, this particular group of conservatives simultaneously sowed the seeds of neoliberalism.
Although they had seized the upper hand, the irreconcilables and their allies perceived quite clearly that threats to the rule of white wealth lurked down the uncertain path that ultimately led to World War II. The War Powers Acts of 1941 and 1942 vested the president with authority far surpassing that which he had wielded previously.131 The federal government operated with greater power, latitude, and public support than ever before.132 During the Second World War, agencies in Washington, D.C. controlled prices, wages, and rent.133 As the effects of military conscription and industrial mobilization rippled through the nation's labor markets, Dixieland shook. The Great Migration of African Americans northward crested. Meanwhile, massive outlays for preparedness and production crushed the irreconcilables' hopes of rolling back the heavy taxation, spending, and borrowing of the federal government.134 Indeed, the rapidity and the scale of wartime public investment flatly contradicted claims about the potency and efficacy of individual investors and private financial markets—claims upon which the preferential treatment of capital gains was based. Throughout the Second World War, the irreconcilables and their confederates stood at high alert.135
Expanded federal authority was felt keenly in labor relations. War production and enlistment revived employment, spurring both unionization and political insurgency on the part of American workers. By 1945, one-third of all non-agricultural workers belonged to a union—the highest rate of union density ever achieved in the history of the United States. Although Roosevelt secured no-strike pledges from union leaders, unauthorized "wildcat" strikes flared up nonetheless. In 1943, CIO leader John [End Page 124] L. Lewis defied the president when he led the United Mine Workers out for twelve days.136
As southern workers poured into unions, engaged in wildcat strikes, or departed Dixie entirely, they pushed back forcefully against the ruthless low-wage regime favored by enclave autocrats and their stand-ins in the Senate. And the federal government presented its boldest challenges to Jim Crow yet with prohibitions against racial discrimination in military conscription and defense industry work—including Executive Order 8802, which established the Fair Employment Practices Committee in 1941. Meanwhile, black voters in the North pressed their representatives in Congress to attack Jim Crow's tools with bills that would outlaw poll taxes, all-white primaries, and lynching. Membership in the NAACP multiplied eightfold. Black voters and black soldiers moved racial integration to top of the liberal agenda during and after the war, despite the onslaught of racist violence perpetrated against them.137
The Second World War restructured the nation's capital markets, as well. In order to expedite and expand production for the war effort, the federal government launched new experiments in financing the construction of plant and infrastructure. In the summer of 1940, the Reconstruction Finance Corporation—the largest bank and the largest corporation in the United States at the time—established a new subsidiary, the Defense Plant Corporation (DPC). It soon became the most important source of investment in the nation, indeed, in the entire world.138
Ultimately, the federal government financed and owned two-thirds of all the new manufacturing facilities built during the war—with half those investments made through the DPC, and the other half through the Army and Navy. Over the same period, the value of federal investments totaled twice as much as all those made by the private sector. Although private firms operated DPC factories under federal contracts, the U.S. government owned nearly a quarter of the nominal value of all the factories in the country at the end of the war. In addition, the wartime state seized dozens of companies, often after their executives violated federal labor [End Page 125] laws.139 Taken all together, Uncle Sam held the largest portfolio of state-owned assets outside of the Soviet Union by 1945. These investments paid returns in the form of innovations in sonar, radar, computing, electronics, materials science, aviation, and more.140
Given the colossal expense incurred by the wartime state, how did it come to pass that Congress never raised tax rates on capital gains, but rather lowered them? After all, lawmakers broadened the tax base during World War II (35.7 percent of the labor force paid personal income taxes in 1945, up from 5.8 percent in 1939). They hiked the tax rates levied on both earned income and corporate income. But despite the administration's wish to equalize tax rates on investment income and earned income, the irreconcilables and their allies managed to protect—and to expand—the preferential treatment of capital gains during the Second World War.141
Perhaps only Emil Schram could make the case. Who better to voice claims about investment than the former leader of the Reconstruction Finance Corporation and the Defense Plant Corporation? In 1941, Emil Schram resigned his positions with the two largest financial institutions in the world. When he accepted a $50,000 salary offer from the New York Stock Exchange, Schram flouted President Roosevelt's CIO-backed efforts to limit salaries to $25,000 in wartime. At a time when corporate executives and businessmen packed up for Washington, D.C., to serve the government as "dollar-a-year" men, the new president of the New York Stock Exchange headed in the opposite direction.
Admittedly, Schram knew "nothing about the securities business." But the stock exchange needed "someone to come in" and "teach" its leaders and members "to live with Washington," as NYSE leader John A. Coleman explained to Schram.142 Trading volume had collapsed and, as a [End Page 126] result, the commission revenue of NYSE member firms had plummeted. Schram's old boss at the RFC, Jesse Jones, predicted the nationalization of the New York Stock Exchange.143
Emil Schram disagreed. "It seems to me what you need here is volume," he told the NYSE board of governors, "the only way to get volume is to encourage people to trade." And so Schram, a life-long Democrat, set out to secure a "change in the tax law," surmising that trading would pick up if Congress cut taxes on capital gains.144
Outside of the NYSE boardroom, however, Emil Schram delivered a different rationale. He promised legislators in Congress, voters at campaign rallies, businessmen at association meetings, and citizens at war bond assemblies that a reduction of taxes on capital gains would "free equity capital" to finance the "defense effort." At present, claimed Schram, investors failed to purchase war bonds to the necessary extent because the penalty of taxation encumbered their "freedom … to make necessary shifts in their holdings."145 The tax code destroyed "incentive," the NYSE president explained. It rendered "venture capital impotent" and it obstructed "free movement of capital from industry to industry, from investor to user." Now was the time, he advised, for lawmakers to encourage "private capital" to "perform its traditional function, particularly in preparation for post-war readjustment."146 Schram reassured those—like the irreconcilables—who feared enormous wartime budget [End Page 127] deficits that, by lowering the tax rate on capital gains, Congress would "increase the revenue" collected by the IRS because "the amount of tax revenue is in inverse proportion to the tax rate."147
"It took a long time to get it done," Emil Schram remembered in later years. While tax bills originated in the House, he knew that legislation was "really formulated and dressed up in the Senate, [in] the Senate Finance Committee." So there he focused his efforts. Finally, Schram pushed capital gains tax reduction "through that damn finance committee in the Senate" with the Revenue Acts of 1942 and 1943. It helped that he had endeared himself to the irreconcilables when he refused Roosevelt's request to fire the friends of Senator Walter F. George from their RFC positions back in 1938. "Who was the head of the Senate Finance Committee" in 1941? The very same Senator Walter F. George.148
During his tenure as chairman of the Senate Finance Committee (1941–1947, 1949–1953), George occupied a suite at the Mayflower, the hotel favored by the president of the New York Stock Exchange. Soon, the two men knew each other "very, very well." George chose "a senator from Michigan"—probably Prentiss Brown (D-MI)—to "handle" tax bills in accordance with NYSE preferences. It put the "Stock Exchange back in business," Schram recalled with pride. He proved Jesse Jones wrong.149 [End Page 128]
Far more was at stake than reviving trading volume on the New York Stock Exchange or determining the optimal manner of raising revenue for the war, as Emil Schram knew. Like many other business leaders and associations, the NYSE sought to shape the meaning and implications of the miraculous economic recovery achieved during World War II.150 As NYSE members enlarged their client lists by marketing war bonds to the public, they positioned the NYSE to counter interpretations and plans for the future offered by liberals and radicals alike.
Could American capitalism ever wean itself off of government financing? This question anguished the New York Stock Exchange and the irreconcilables, as well as the conservative Republicans who began to take back congressional seats in 1942. Some liberal visions of postwar possibility featured continued federal ownership of the assets that had been acquired with Americans' tax dollars and war bond subscriptions. Labor leader Walter Reuther of the United Auto Workers, for example, proposed that DPC plants might be repurposed to build affordable housing and mass transit facilities; they could be leased to worker-owned cooperatives or to private corporations if they agreed to equalize wage rates across regions (and, implicitly, between races).151 Secretary of the Interior Harold L. Ickes advised that DPC assets should be sold to veterans to provide "ten million young persons shares of stock in the America for which they risked their lives."152 Others envisioned that state-owned DPC facilities, along with a robust federal National Resources Planning Board, might insure full employment and mass affluence in the postwar period.153 Should the Fair Employment Practice Committee secure the extension—and the enforcement power—that A. Philip Randolph of the Brotherhood of Sleeping Car Porters and other civil rights leaders demanded, planned prosperity in the postwar period would be integrated.
The president of the New York Stock Exchange answered unequivocally. The "$10 billion of plant and property engaged in war production" owned by the federal government augured a "socialistic trend of dangerous significance." The former leader of both the Defense Plant Corporation and the Reconstruction Finance Corporation now insisted upon the immediate postwar privatization of all DPC assets, along with further cuts [End Page 129] to capital gain taxes. If provided with these "necessary incentives to the stimulation of private enterprise," Emil Schram swore, the "free flow of venture capital" would propel the postwar economy to levels of "maximum production and maximum employment." He stressed the centrality of the individual investor to the "system of free enterprise," dismissing the very agencies he once led. When "government" supplies "risk capital," Schram explained, it "becomes the great entrepreneur" and "the private incentive to assume risks in the hope of gains gradually dies." Ultimately, the "capitalistic" system would wither away. Such an outcome could only be avoided if the federal government sold off all DPC facilities to "leading industrial corporations" owned by "private investors," asserted Schram. He promised also that immediate privatization would drastically reduce the national debt and the number of public sector employees.154
In identifying the size of the federal sector as a major impediment to economic reconversion and recovery after the war, the New York Stock Exchange hitched itself to the rising star of Senator Harry F. Byrd, Sr. Perhaps the most vocal critic of fiscal policy and union power in Congress, Byrd attracted the ardor of conservatives across the country during the war, Democrats and Republicans alike.155 "I would vote for an outstanding Democrat like you, if given the opportunity," pined one investor, a Republican from Binghamton, New York.
People of my class, who are the backbone of this country, and number millions, have a real stake in an orderly government and a sound fiscal policy. We don't want our bonds depreciated and have our life insurance and annuities paid off in depreciated money … after we worked all our lives to lay by something for old age. We middle-class conservatives, regardless of our party affiliation, and regardless of in what section of the country we live—North or South—have a common interest and it seems [End Page 130] too bad that we can't vote together in one party and keep things under control.156
Stock broker E. F. Hutton, a NYSE member, hoped to draft Byrd for a presidential run on either the Republican or a fusion ticket. He brokered meetings for Byrd with Republican donors, leaders, and politicians.157 The irreconcilables drew closer to conservative Republicans.
Alongside the question of the privatization of war plant, the irreconcilables and their allies faced renewed momentum for the New Deal. In January 1944, FDR delivered a fireside chat that proposed an "economic bill of rights" for all Americans. It included the guarantee of a job, "the right to earn enough to provide adequate food and clothing and recreation," the right to "adequate medical care" and "good health," security against "economic fears of old age, sickness, accident, and unemployment," and, finally, "the right to a good education." Equally troubling to the irreconcilables was Roosevelt's call for federal legislation to guarantee the voting rights of all veterans—white and black—in that same year.158
Refusing FDR's plans for a postwar revival of the New Deal, Emil Schram cautioned that taxes must never target "social purposes rather than revenue as their main objective," lest the nation "advance any farther in taking from the prudent and productive to maintain the improvident and indolent."159 Citizens must not trade away "the benefits and liberties of a free market" for the "regimented form of security" that modern liberalism offered. Foraying into Dixie more frequently, NYSE emissaries learned the insinuations that enclave rulers and irreconcilable politicians [End Page 131] used to flag hazards to white supremacy.160 "You and I think alike," the NYSE president winked at members of the Houston Chamber of Commerce as he stumped for Representative Hatton W. Sumners (D-TX), a resolute foe of anti-lynching legislation who had led the opposition against FDR's court-packing plan in 1936–1937.161
Back in Washington, D.C., "I knew all of them and they knew who I was," Emil Schram recalled about the nation's congressmen. "Chances are they all had clients that they called me to ask me to see when I was chairman of the board of the RFC." For the next decade, the NYSE president "spent practically all" of his time stationed "outside that committee room." He "collared every senator, Democrat or Republican" on the Senate Finance Committee. And when Senator Walter F. George or any other dependable committee member—no matter their party affiliation—needed "financial help" to secure re-election, "they did not hesitate to send someone to see" the president of the New York Stock Exchange "about a contribution."
Emil Schram "knew who could afford" to contribute. Back in New York City, he visited NYSE members at their trading posts on the floor and in their offices. "I had no trouble raising the money to help in those campaigns," Schram recounted, "I just went to them personally. And it was just by word of mouth." The cash travelled back to Washington, D.C., on Schram's person, $50,000 per trip (nearly $1 million in 2019 dollars). "Of course it was [illegal]," he admitted later, "it's always been illegal."162 But it was necessary. Growing numbers of African American voters had strengthened their political influence within the Democratic Party. So too had labor unions. The dues of millions of members—including half million black workers—swelled the coffers of unions' new political action committees (figures 4 and 5).163
Graft helped. In the end, only death (or terminal illness) would part [End Page 132]
Pat Harrison, Josiah W. Bailey, Walter F. George, Arthur Vandenberg, and Harry F. Byrd, Sr., from their Senate seats. The irreconcilables controlled the Senate Finance Committee for three decades, nearly uninterrupted.
From Senator Harrison's rift with Roosevelt in 1937 through Senator Byrd's term as chairman (1955–1965), the irreconcilables safeguarded the tax code's preference for gains from investment. It was just the kind of disguised social policy that an intransigent advocate of balanced budgets and white supremacy could love. Byrd and his cohort could allow themselves to believe that the tax break for capital gains did not contribute to the federal deficit because the government did not spend money—rather, the IRS failed to collect the tax revenue in the first place.164 The capital gains preference appeared race-neutral, too. Given that so very few African American [End Page 133]
households owned the types of assets (like stocks and bonds) whose gains have enjoyed preferential treatment (figures 6 and 7), the tax break for capital gains privileged whites almost exclusively, helping to conserve and multiply their wealth over time.165 Even as white and black workers' incomes rose thanks to federally protected collective bargaining, even as white workers acquired homes in "red-lined" communities with federally guaranteed mortgages, and even as the GI Bill vastly enlarged the white middle class, the irreconcilables held ground for wealthy whites.166 [End Page 134]
In the summer of 1946, the greatest strike wave in U.S. history hit Wall Street. The employees of NYSE member firms walked off their jobs to demand recognition of the United Financial Employees' Union (UFEU). Conflict wore on for two years, until the employees of the New York Stock Exchange struck in the hopes of pressuring the NYSE leadership "to force the Stock Exchange members" to accept a closed shop across [End Page 135]
the financial district. Furious that he "had to sit across from union representatives" and to serve himself lunch at the Exchange Club ("all they had to eat was tripe"), Emil Schram crushed the strike. Beginning with "the oldest men," Schram fired half of the workforce. "It was a cruel thing to do. You couldn't get by with it today," he mused in 1984. "I did it partly [for] punishment."167 In the end, the UFEU received no recognition. [End Page 136] The employees of the New York Stock Exchange returned to work at wages dictated by Schram.168
The rapid rise and fall of organized labor on Wall Street exemplify how American unions stalled—and employers rose up—after the Second World War. In the South, the Congress of Industrial Organization set in motion "Operation Dixie" to organize black and white workers in 1946. It too met a cruel response—red-baiting, mob violence, and police brutality—from authoritarian enclave rulers and their patrons and clients.169 At the national level, the backlash against the labor movement helped Republicans capture Congress in 1946.
Led by Senator Robert A. Taft (R-OH)—another member of the Senate Finance Committee of whom Emil Schram was "particularly fond"—these conservative Republicans teamed with irreconcilable southern Democrats to roll back the wartime state's incursions in the economy.170 The coalition moved swiftly to cut taxes on earned and corporate incomes, to speed economic demobilization, to privatize DPC assets, and to terminate the Fair Employment Practices Committee along with wartime agencies of economic planning and price control.171 They defanged the Employment Act of 1946 so that it failed to guarantee full employment. In 1947, the conservative coalition passed the Taft-Hartley Act over President Truman's veto. That law checked the power, activities, and spread of labor unions by banning the closed shop, restricting strikes and boycotts, regulating unions' contributions to political campaigns, and removing most pension funds from union control. The Byrd political machine saw to it that Virginia passed the nation's first "open shop" law.172
By aligning with the conservative Republicans around Taft, the irreconcilables fought modern liberalism to a standstill. And yet, these same pro-business Republicans focused far more attention on corporate tax rates and depreciation schedules for corporate assets.173 So did business [End Page 137] organizations like the National Association of Manufacturers and the Chamber of Commerce, the emerging conservative media, and the growing conservative movement. Indeed, capital gains taxes—which were paid by individuals—mattered little to most of the corporate leaders, business groups, conservative Republicans, evangelical Christians, and cold warriors that trumpeted the virtues of "free enterprise" in the postwar decades.174
For despite what the New York Stock Exchange continued to claim, corporate reinvestment of retained earnings and government spending funded technological innovation and economic expansion in the United States in the decades following World War II.175 In this context, American workers enlarged their incomes and their political power while the civil rights movement gained ground against Jim Crow. Although the irreconcilables clung to their positions of Senate leadership and rabid Cold War anti-communism hemmed in the Left, groups such as the CIO, the NAACP, and the Congress for Racial Equality (CORE) continued to demand that taxes on capital gains should be made equal to those levied on wages and salaries. "Without a doubt, real estate—and its sister, the stock market—are the two provinces where money can be made most quickly in our society," one fair housing activist wrote in 1962.
Accelerated depreciation, capital gains, the single tax on syndicate ownership: the entire structure, emphasizing cheap building and rapid sale, is a mechanical milker that pumps out a continual stream of cream from the public cow. As long as the laws deliberately subsidize the rich and rapacious, a frenzy of building and speculation will be a permanent aspect of American life, a frenzy which has robbed America of internal equilibrium and a sane view of the changing world.176
In the two decades after the Second World War, it fell largely to the leaders and spokesmen of the New York Stock Exchange to perpetuate [End Page 138] justifications for the preferential treatment of capital gains.177 And it fell largely to the irreconcilable southern Democrats on the Senate Finance Committee to preserve that tax break. The champions of white wealth now pondered a new tactic. Where the New Deal had embraced the white worker as its favored beneficiary, the guardians of white wealth idealized the investor, whose whiteness and masculinity were too obvious to require specification. Envisioning a constituency of investors bridging sectional and partisan divides, they took steps to enlarge and to sway that population. In doing so, they anticipated the flight of conservative southerners into the Republican Party that began in earnest in the 1960s.178
In Whither the Solid South? A Study in Politics and Race Relations (1947), Charles Wallace Collins conjectured that only a "North-South coalition" of investors could "save the United States" from the "two virulent" hazards of "negro equality and state capitalism." He called for a new "Conservative Party" to be erected upon the following foundation: the freedom of "private capital in the hands of free individuals," the "freedom to risk venture capital" for profit "unhampered by the controls of national planners" and the penalty of capital gains taxation, the "wide dissemination of private ownership of property" in the form of mass stock ownership—and, of course, the "restriction of the Federal Government to Federal objectives as provided by the Constitution" and the "preservation of local self-government." Collins predicted the "Solid South would naturally fall in" with his Conservative Party, as would any voter who agreed that "private capital in the hands of free individuals" had "made America great and given her people the highest standard of living on earth." Those who wished to "use the taxing power to distribute the national wealth" to the undeserving, by contrast, could join the "negro vote" in a national "Liberal Party."179 [End Page 139]
Collins' call roused the so-called Dixiecrats, the southern delegates who walked out of the 1948 Democratic National Convention after northern liberals introduced a civil rights plank into the national platform. Abandoning President Truman on account of his decision to establish a committee on civil rights and his order to desegregate the military, the Dixiecrats formed a new States' Rights Democratic Party that nominated South Carolina governor Strom Thurmond, Jr., for president. This Dixiecrat revolt marked the beginning of the end of the so-called Solid South. And although the irreconcilables were not ready yet to abandon the Democratic Party, they rose up to lead what Senator Harry F. Byrd, Sr., termed "massive resistance" against court-ordered integration and civil rights legislation after Brown vs. Board of Education (1954).180
This moment also marked the beginning of a campaign by the New York Stock Exchange to promote mass investment in corporate stock. Shortly after NYSE president Emil Schram put down the 1948 strike, he unveiled "an advertising program trying to encourage people to own a part of America, have an interest in the ownership of American business." In materials that supported member firms' marketing, in communications with corporate executives and educators, in literature produced for members' customers and for the shareholders of listed corporations, in radio and television appearances, in motion pictures, and in testimony before legislators, NYSE representatives engaged in a "ceaseless effort to impress the fact upon the general public" that the American way of life depended on a "steady and ample flow of private capital" from individuals to the stock market. "The rewards of a system where an individual is free to take a better job" had been "told many times" by employers and by politicians in anti-union right-to-work campaigns, observed one NYSE speaker. Yet "the freedom of capital to venture where it pleases" remained unappreciated and misunderstood, the NYSE leaders estimated.181 They called upon members along with the executives of listed corporations to educate customers, employees, and shareholders about "the meaning of profits—the role of dividends—the importance of widespread share-ownership."182 In just one example of its vast reach, the New York Stock [End Page 140] Exchange distributed 75 million copies of a pamphlet decrying the taxation of corporate dividends in 1959.183
The NYSE "Own Your Own Share" campaign portrayed stock ownership as the best guarantor of genuine security for responsible individuals, in contrast to the supposedly false promises of the welfare state, job-based benefits, or labor union offerings. "'Security from the cradle to the grave' is a noble concept," allowed Emil Schram's successor, G. Keith Funston (1951–1967).
Let's not allow our search [for security] to carry us into a bed of feathers which will stifle incentive and smother progress. I believe my best chances for security lie not in the prospect of my social security check at age 65, but rather in my opportunity to compete in a free society and to participate in the new development created by men of vision who have the incentive to venture and to take a risk.184
What mattered most was neither the strength and reach of the social safety net, nor the distribution of wealth and income, but rather the extent of asset ownership (particularly stock ownership), Funston instructed. Between 1952 and 1964, the percentage of American households owning corporate stock rose from 11 percent to 24 percent—but the incidence of stock ownership among non-white households remained negligible (figure 7).185
When the irreconcilables lost their last stand against legally recognized (or de jure) segregation with the passage of the Civil Rights Act of 1964 and the Voting Rights Act of 1965, Senator Harry F. Byrd, Sr., remarked, "time and circumstances change, but principles do not."186 The preferential [End Page 141] tax rate on capital gains held steady at a maximum rate of 25 percent until 1965. That same year, Byrd retired upon receiving the diagnosis of a brain tumor. NYSE president G. Keith Funston thanked him for his ever "sympathetic ear" and for "the many courtesies" he "extended" over the years in blocking attempts to raise taxes on gains from investments.187
The torch now passed to Senator Russell B. Long (D-LA), the son of none other than the infamous Huey Long. Ever since Russell Long had entered Congress in 1949, he had backed the irreconcilables in their fight against civil rights legislation.188 Once elected party whip, however, Long broke with Byrd to support the Voting Rights Act. During the Johnson administration, Long maintained the party discipline required to pass Great Society legislation.189
Where the Kingfish once demanded that Americans "Share Our Wealth," his son encouraged them to "Own Your Own Share." The father's concern for the forgotten man morphed into his son's conviction that the tax code should encourage the small investor. As chairman of the Senate Finance Committee (1965–1981), Long protected preferential rates for capital gains against every demand from the Left to equalize them with those levied on ordinary earned income.190 Long also secured additional tax breaks to encourage corporations to develop employee stock ownership plans. When he retired from the Senate in 1987, the New York Stock Exchange appointed Russell B. Long to its Board of Governors in gratitude for his faithful support.
Josiah W. Bailey, Walter F. George, and Harry F. Byrd never imagined that in the end, the preferential treatment of investment gains could fit perfectly with midcentury liberalism. Indeed, in the 1950s and 1960s, liberal policymakers created a complex and opaque system of tax breaks, tax credits, subsidies, and guarantees that advanced the interests of middle-and high-income Americans—a disproportionately white population.191 [End Page 142] Even as black activists attacked overt racial discrimination in labor, housing, and mortgage markets, and even as minority home ownership rose, sizeable racial gaps in median income and median wealth remained.192 Durable patterns of racial inequality persisted.193
Beginning in the 1970s, insurgents within both the Republican Party and the Democratic Party took up capital gains tax "relief" as their signature issue. Lloyd Bentsen (D-TX), Jack Kemp (R-NY), and NYSE-favorite William Steiger (R-WI) reframed this tax break as the scourge of stagflation and the catalyst of innovation. Russell Long never revealed to these upstarts that preferential tax rates for investment gains had been a favorite tool of his father's foes. And the upstarts never cared to contemplate that history. When the Revenue Acts of 1978 and 1979 reduced tax rates on capital gains to pre-New Deal levels, they signaled a breakthrough victory for Republican "supply-siders" and for the market-oriented Democrats who anticipated the New Democrats of the Clinton era.194 The neoliberal age had arrived.
Any historical narrative is a particular bundle of silences.—Michel-Rolph Trouillot195
When political strategist Lee Atwater let slip in a 1981 interview that he had taught Republicans to charm white voters with a tune of tax and [End Page 143] budget cuts—and to sustain white supremacy in a post-Brown era by enacting those cuts—he claimed too much credit for originality.196
You start out in 1954 by saying, "Nigger, nigger, nigger." By 1968 you can't say "nigger"—that hurts you, backfires. So you say stuff like, uh, forced busing, states' rights, and all that stuff, and you're getting so abstract. Now, you're talking about cutting taxes, and all these things you're talking about are totally economic things and a byproduct of them is, blacks get hurt worse than whites … "We want to cut this," is much more abstract than even the busing thing, uh, and a hell of a lot more abstract than "Nigger, nigger."197
From 1936 to 1965, the southern Democrats who controlled the Senate Finance Committee marshaled federal tax policy to retrench the power of wealth and to disguise the racist nature of that project. No boundary separated the economic relations of class from the social and cultural relations of race, either for the irreconcilables or for their allies on Wall Street and in the Republican Party. These champions of white wealth always understood economic inequality and white supremacy as mutually constitutive.198
Beginning in the 1930s, they worked to remake and to obscure that entanglement when faced with the possibility of an anti-racist labor rebellion. And while historians rightly criticize midcentury liberalism as (at best) woefully inadequate with respect to racial and distributional justice, its irreconcilable adversaries never doubted that it possessed the capacity to mobilize workers across the color line into a political force powerful enough to break the grip of white wealth.199 Despite its deliberate omissions, concessions, inequities, and perpetrations with respect to race, gender, and sexual orientation—and notwithstanding its deference to private [End Page 144] market institutions—modern liberalism deployed progressive taxation and social investment to challenge private inheritance as the primary means of social reproduction and social mobility in the United States.200 The white supremacists who led the Senate Finance Committee at mid-century answered this test by preserving and enlarging the tax preference for capital gains.
Politics involves more than successive policy battles, as political scientist Deva Woodly teaches us. Discursive struggles between competing understandings of both how the world is and how it ought to be underlie durable changes in policy and political institutions.201 The justificatory framing for the capital gains tax preference drew upon many sources. It tapped into Progressive Era reveries about the potential of financial markets to democratize capitalism through mass investment.202 It referenced conservative critiques of state expansion and fear of the power of organized labor. It fit with modern liberals' embrace of federal policies that raised incomes and built wealth for white households, as well as their stubborn refusal to redress racial inequality directly. All in all, the tax break for capital gains owes more to the "common sense" and wishful thinking of financiers and legislators than to the theories of academic economists more often recognized by historians as the progenitors of neoliberal thought and policy.203 By 1978, the rationale for the preferred tax rates on capital gains—which prioritized investors, investment, and financial markets—informed an emerging neoliberal consensus that pervades economic policy in the United States still.
In 2016, the federal government forewent $109.5 billion in taxes on capital gains, a giveaway (or tax expenditure) second only to the exclusion of employers' contributions to employees' health plans.204 The historical [End Page 145] record indicates that tax rates on capital gains income exercise little influence on economic growth, innovation, productivity, employment, savings, tax revenue, or even stock market returns.205 And, of course, taxes that the federal government does not collect cannot fund public infrastructure and investments, social benefits, or policies that might reduce any of the myriad forms of inequality—all of which continue to be marked by profound racial inequity.206
. For their assistance and for their patience, I thank editor Marc Flandreau, Inês Gomes, Michelle Niemann, and the referees at Capitalism. For careful readings, insightful conversations, and helpful suggestions, I extend deep gratitude to my colleagues and friends: John Ott, Lila Corwin Berman, Bethany Moreton, Serena Mayeri, Rebecca Davis, Andre L. Smith, Darrick Hamilton, Michael Dawson, Deva Woodly, Kim Philips-Fein, Kaavya Asoka, Tim Shenk, and Andre L. Smith. Ajay Mehotra deserves special thanks for rousing my interest and collaborating so generously in the initial research. Numerous workshop and conference participants offered helpful comments and criticisms, including the Princeton University History department, the Business History Workshop at Wharton Business School (Dan Raff and Walter Licht), the "Great Polarization" conference organized by the economics department at the University of Utah (Rudi Von Armin), the "We Are What We Tax" conference sponsored by Fordham Law School (Mary Louise Fellows and Linda Sugin), and the economic justice speakers series hosted by the economics department at John Jay College of Criminal Justice (Geert Dhondt). With great appreciation, I acknowledge the financial support of the Robert L. Heilbroner Center for Capitalism Studies at the New School for Social Research, as well as the intellectual camaraderie of the 2018–2019 Heilbroner faculty fellows: Ying Chen, Aaron Jakes, Emma Park, Janet Roitman, Koray Caliskan, Caitlin Zaloom, Virag Molnar, Mia White, and most especially Will Milberg.
2. For recent and influential works, see Saez and Piketty, "Income Inequality in the United States"; Piketty, Capital in the Twenty-First Century; Hacker and Pierson, Winner-Take-All Politics; Bivens and Mishel, "Pay of Corporate Executives and Financial Professionals"; Gilens, "Inequality and Democratic Responsiveness"; Baker, Rigged; Dadush et al., Inequality in America; Collins, Di Leonardo, and Williams, ed., New Landscapes of Inequality; Atkinson, Inequality; Gordon, Fat and Mean; Milanovic, Haves and the Have Nots; Lindert and Williamson, Unequal Gains; Frank, Falling Behind; Reeves, Dream Hoarders; Galbraith, Inequality and Instability; Stiglitz, Price of Inequality; Baradaran, Color of Money; Shapiro, Hidden Costs of Being African American; Oliver and Shapiro, Black Wealth/White Wealth; Akee et al., "Role of Race, Ethnicity and Tribal Enrollment on Asset Accumulation"; Hamilton, Why, Despite Post-Racial Rhetoric, Do Racial Health Disparities Increase at Higher Income Levels?; Darity et al., "Stratification Economics"; Zaw et al., Women, Race and Wealth; Hamilton and Darity, Stark Black and White; Nam et al., Bootstraps are for Black Kids; Hamilton, "Race, Wealth, and Intergenerational Poverty"; Keister, Wealth in America; Brady, Schlozman, and Verba, Unheavenly Chorus; Chang, Shortchanged; Saez and Zucman, "Wealth Inequality in the United States Since 1913"; Gordon, Growing Apart; Jenkins, "Racial Wealth Gap."
4. Investments that qualify as capital assets and therefore receive preferential treatment include financial securities, financial contracts, a business, land or other real estate, and a piece of art or other collectables held as investments. Interest from investment is taxed as ordinary income. Dividends payments may qualify for preferential treatment as capital gains, if held for the period of time stipulated in the tax code.
Proceeds from the sale of a personal residence first qualified for capital gains tax treatment in 1951, about the same time that homeownership rates in the United States hit 50 percent. Congress included a provision deferring all taxes if proceeds were reinvested in another home. In subsequent years, the tax code has exempted home sales from taxation entirely, so long as the proceeds did not exceed a specified exclusion limit. High exclusion thresholds have meant that the vast majority of home-sellers have not paid any taxes on their proceeds. At present, taxpayers may exclude up to $250,000 if single or $500,000 if filing jointly. Gravelle and Jackson, Exclusion of Capital Gains for Owner-Occupied Housing.
5. Bowman, O'Neil, and Sims, Public Opinion on Taxes—1937 to Today; Williamson, Read My Lips. For the sharp decline in tax progressivity in the United States since the 1960s, see Saez and Zucman, The Triumph of Injustice. Also www.taxjusticenow.org.
6. Hungerford, Economic Effects of Capital Gains Taxation; Feenberg and Summers, "Who Benefits from Capital Gains Tax Reductions?"; Burman, "Taxes and Inequality," 587; Congressional Budget Office, Distribution of Major Tax Expenditures; Congressional Budget Office, Perspectives on the Ownership of Capital Assets; Steuerle et al., Who Benefits from Asset-Building Tax Subsidies; Saez and Zucman, Who Benefits from Tax Expenditures on Capital?
8. Mason, "Understanding Short-Termism"; Lazonick, "Value Extracting CEO"; Foroohar, Makers and Takers; Davis, Managed by the Market; Davis, Vanishing American Corporation; Glyn, Capitalism Unleashed; Palladino, "Stock Buybacks."
11. For broader treatments of the relationship between taxes and racial inequality, see Smith, Tax Law and Racial Economic Justice; Moran and Wildman, "Race and Wealth Disparity"; Moran, "Capitalism and the Tax System"; Brown and Fellows, ed., Taxing America; Brennan, Brown, and Jones, ed., Beyond Economic Efficiency.
12. Sociologist Monica Prasad views the massive reduction of top marginal rates in 1981 as "the most important instance of American neoliberalism" because it "threatened state capacity." Prasad, "Popular Origins of Neoliberalism." See also Prasad, Starving the Beast.
13. The market appears powerful but fragile in neoliberal thought. So powerful it should serve as a template and an instrument for all forms of social organization. So fragile that attempts to temper or shape market outcomes—including taxation—disturb the machine, distorting prices and compromising the efficiency, impartiality, and democracy of the market.
For helpful reviews of the vast literature on neoliberalism, see Cahill and Konings, Neoliberalism; Hall, "Neo-liberal Revolution"; Connell and Dados, "Where in the World Does Neoliberalism Come From?"; Ferguson, "Uses of Neoliberalism"; Peck, "Explaining with Neoliberalism"; Peck, Constructions of Neoliberal Reason, 13–38; Philips-Fein, "History of Neoliberalism"; Boas and Gans-Morse, "Neoliberalism"; Eagleton-Pierce, Neoliberalism; Lazzarato, Making of the Indebted Man; Brown, Undoing the Demos; Rodgers, "Uses and Abuses of 'Neoliberalism'"; Ott et al., "Debating the Uses and Abuses of Neoliberalism"; Dawson and Francis, "Black Politics and the Neoliberal Racial Order."
14. Neoliberal thought collapses any distinction between primary markets (where enterprises obtain funding) and secondary markets (where investors trade existing assets). Lumping these functions together, neoliberalism identifies "investment" and "investors" as the sources of economic growth and progress. Corporations exist to maximize returns to shareholders.
16. Mehrotra, Making the Modern American Fiscal State.
19. King, "From Redistributive to Hegemonic Logic," 24; United States Department of the Treasury, Annual Report (1921); Mehrotra, Making the Modern American Fiscal State; Mellon, Taxation.
20. Internal-Revenue Hearings: Before the Committee on Finance, United States Senate, on the Proposed Revenue Act of 1921, 67th Cong., First Session (1921), 37.
21. Internal-Revenue Hearings, 67th Cong., First Session (1921), 227, 233.
23. Internal-Revenue Hearings, 67th Cong., First Session (1921), 449, 551.
24. Internal-Revenue Hearings, 67th Cong., First Session (1921), 121, 253, 535, 540, 551.
25. Internal-Revenue Hearings, 67th Cong., First Session (1921), 540–545.
29. Brownlee, Federal Taxation in America, 124–27, 131; Prasad, Land of Too Much, 125–41; Thorndike, "Unfair Advantage of the Few"; King, "From Redistributive to Hegemonic," 32; Leff, The Limits of Symbolic Reform, 48–202.
31. King, "From Redistributive to Hegemonic," 32; Brownlee, Federal Taxation in America, 119; Huret, American Tax Resisters, 141–64; Thorndike, "'The Unfair Advantage of the Few'"; Thorndike, Their Fair Share, 105–68.
32. New York Stock Exchange Archives [hereafter NYSE archives], Charles R. Gay, "The Duties and Rights of Security Markets: an address delivered at a meeting of the Association of Stock Exchanges, St. Louis, MO, May 20, 1935," 3, box 4, Record Group 2–2.
33. NYSE archives, Richard Whitney, "Elements of Recovery an address at the 53rd Annual Dinner of the Engineers' Society of Western Pennsylvania, Pittsburg, PA, February 26, 1935," 285, box 3, Record Group 2–2; Richard Whitney, "The Investor and the Security Markets: An address over the NBC-WEAF network of NBC, January 30, 1935," 280–281, box 3, Record Group 2–2.
Here, the stock exchange forged a new meaning for "incentive," one that anticipated present-day neoliberal usage. This model of human motivation conceives of incentives as prompts that encourage individuals to enter markets where they will achieve optimal outcomes for self and for society. Over time, "incentives" spread beyond tax policy into social policy, environmental policy, educational policy, and more. Grant, Strings Attached.
34. Whitney, "Elements of Recovery," 280–1; NYSE archives, Richard Whitney, "The Investor and the Securities Markets," 284, box 3, Record Group 2–2; Gay, "Stock Market Controls," 68; Gay, "The Duties and Rights of Security Markets," 3; NYSE archives, Richard Whitney, "Economic Freedom: an address at a dinner of the Chicago Association of Stock Exchange Firms, Chicago, IL, December 10, 1934," box 3, Record Group 2–2.
36. Richard Whitney, "Elements of Recovery," 285
38. NYSE archives, Charles R. Gay, "Conservatism: an address delivered before a meeting of the Mid-Day Luncheon Club, Springfield, IL, October 18, 1935)", 2, box 4, Record Group 2–2.
40. NYSE archives, Charles R. Gay, "Capital Markets and Business Recovery: an Address before the Illinois Manufacturers' Cost Association, Chicago, IL, April 27, 1937," 14, box 4, Record Group 2–2; Whitney, "Economic Freedom," 232.
41. Whitney, "Economic Freedom," 242.
42. Gay, "Capital Markets and Business Recovery."
43. NYSE archives, Entry dated October 22, 1935, Committee on Publicity minute book vol. 5, 44.
44. NYSE archives, Charles R. Gay, "Interdependence: An Economic Philosophy: an address delivered at the luncheon of the Boston Chamber of Commerce, Boston, MA, October 24, 1935," 2, 6, 7, box 4, Record Group 2–2.
45. Whitney, "Economic Freedom," 231.
46. Gay, "Interdependence," 2; NYSE archives, Charles R. Gay, "Some Earnest Delusions: an address at a dinner of business men, March 4, 1936," 6–9, box 4, Record Group 2–2.
49. Gordon, New Deals; Josiah W. Bailey Papers, David M. Rubenstein Rare Book and Manuscript Library, Duke University [hereafter Josiah W. Bailey Papers]: "Statement of George H. Houston before the Committee on Ways and Means," undated, folder "Tax and Tariff—January, 1938," box 254; Emanuel Celler to Josiah W. Bailey, January 17, 1938.
52. Josiah W. Bailey Papers: Chas. H Stone to Josiah W. Bailey, March 6, 1936, folder "Tax and Tariff—1936, March to 1936, April," box 249; George A. Sloan to Josiah W. Bailey, August 3, 1937, folder "Tax and Tariff—July to August 1937," box 253; George Howe to Josiah W. Bailey, October 22, 1937, folder "Tax and Tariff—September to November, 1937," box 253; Josiah W. Bailey to D. N. Gilbert, October 30, 1937, folder "Tax and Tariff—September to November, 1937," box 253; J. W. Kellogg to Josiah W. Bailey, November?, 1937, folder "Tax and Tariff—September to November, 1937," box 253; Investment Banking Association to Josiah W. Bailey, November 19, 1937, folder "Tax and Tariff—September to November, 1937," box 253; George A. Koehl to Josiah W. Bailey, November 19, 1937, folder "Tax and Tariff—September to November, 1937," box 253; James J. Minot to Josiah W. Bailey, December 2, 1937, folder "Tax and Tariff—1937, December" box 253.
53. Josiah W. Bailey Papers, Kernan Robson to Josiah W. Bailey, January 31, 1938, folder "Tax and Tariff—January, 1938," box 254.
54. Josiah W. Bailey Papers: Wood and Low and Co. to Josiah W. Bailey, May 15, 1936, folder "Taxes and Tariff—1936, May," box 251; Walter Parker to Josiah W. Bailey, June 8, 1936, folder "Taxes and Tariff—June, 1936," box 251; George O. May to Josiah W. Bailey, June 26, 1936, box 262. Phillips-Fein, Invisible Hands, 15–22; Shermer, Sunbelt Capitalism; Dochuk, From Bible Belt to Sunbelt.
56. Harry Flood Byrd, Sr. Papers (accession no. 9700), Special Collections, University of Virginia Library [hereafter, Harry Flood Byrd, Sr. Papers], "Transcript of a Speech dated October 13, 1936," folder "H. F. Byrd's Radio Speech on October 13, 1936 and Letters of Commendation," box 130.
58. On ancestor William Byrd II as the epitome of the planter-enslaver class, see Brown, Good Wives, Nasty Wenches, and Anxious Patriarchs; Isaac, Transformation of Virginia; Bushman, Refinement of America; Byrd, Secret Diary of William Byrd of Westover 1709–1712. On enslavers' preference for a weak fiscal state, see Einhorn, American Taxation, American Slavery.
59. Harry Flood Byrd, Sr. Papers, T.E. Chambers to Harry F. Byrd, Sr., November 3, 1934, folder "Letters of Support—Election of 1934—'C'," box 130.
60. Harry Flood Byrd, Sr. Papers, folder "Bailey, Josiah William, 1933–1936," box 129: Josiah W. Bailey to Harry F. Byrd, Sr., November 2, 1934; Josiah W. Bailey to Harry F. Byrd, October 5, 1934; Josiah W. Bailey to Harry F. Byrd, Sr., July 7, 1936. Maclean, Democracy in Chains, 21–24.
65. Josiah W. Bailey Papers: Josiah W. Bailey to J. S. Martin, March 9, 1935, folder "Huey Pierce Long—January, 1933 to March 14, 1935," box 480; E. Morris to Josiah W. Bailey, March 6, 1935, folder "Huey Pierce Long—January, 1933 to March 14, 1935," box 480, Josiah W. Bailey Papers; V.O. Parker to Josiah W. Bailey, March 22, 1935, folder "Huey Pierce Long—March 15, 1935 to December, 1936," box 480; Charles Cowell to Josiah W. Bailey, March 25, 1935, folder "Huey Pierce Long—March 15, 1935 to December, 1936," box 480; T. S. Allen to Josiah W. Bailey, May 14, 1935, folder "Huey Pierce Long—March 15, 1935 to December, 1936," box 480; Owen Barnhill to Josiah W. Bailey, April 25, 1935, folder "Charles E. Coughlin—April 1935," box 480; Josiah W. Bailey to J. E. McLaughen, March 11, 1935, folder "Huey Pierce Long—January, 1933 to March 14, 1935," box 480.
69. Wells-Barnett, Southern Horrors and Red Record; Gilmore, Gender and Jim Crow; Gilmore, Defying Dixie, 125, 161; Hall, Revolt Against Chivalry; Holt, Problem of Race; Fields and Fields, Racecraft; Blackmon, Slavery By Another Name.
74. Josiah W. Bailey Papers: Josiah W. Bailey to General Hugh S. Johnson, June 15, 1937, folder "Political: National—1937, January to July," box 475; Frank Altschul to Josiah W. Bailey, September 23, 1938, folder "National: Political—1938, September to October," box 476; Josiah W. Bailey to Harry F. Byrd, Sr., September 30, 1938, folder "National: Political—1938, September to October," box 476; Josiah W. Bailey to Hon. James A. Farley, September 30, 1938, folder "National: Political—1938, September to October," box 476; Josiah W. Bailey to unaddressed, September 30, 1938, folder "National: Political—1938, September to October," box 476.
76. Josiah W. Bailey Papers: Josiah W. Bailey, "The Recovery Program" (1934), folder "Writings and Addresses, 1934–1935," box 20; Josiah W. Bailey, "Why Not Plan for Recovery," Review of Reviews (March 1935), 29–30, folder "Writings and Addresses, 1934–1935," box 20.
78. Josiah W. Bailey Papers, George A. Sloan to B. B. Gossette, May 16, 1935, folder "Taxes and Tariff—1936, May," box 251. Sullivan, Days of Hope; Egerton, Speak Now Against the Day. On "racial covenants," see Bell, Silent Covenants.
79. Gilmore, Defying Dixie; Rossinow, Visions of Progress, 144–194; Harry Flood Byrd, Sr. Papers, Josiah W. Bailey to Harry F. Byrd, Sr. July 7, 1936, folder "Bailey, Josiah William, 1933–1936," box 129.
81. Josiah W. Bailey Papers: Josiah W. Bailey to R. R. King, August 10, 1936, folder "Political: National—1936, May to December," box 475; Josiah W. Bailey to J. C. O'Mahoney, May 10, 1937, folder "Political: National, 1937, January—July," box 475; Josiah W. Bailey to Peter Gerry, August 19, 1939, folder "Political: National—1938, June to August," box 476; Peter Gerry to Josiah W. Bailey, September 16, 1938, folder "Political: National—1938, September to October," box 476.
83. Josiah W. Bailey Papers, Josiah W. Bailey to W. Forbes Morgan, February 29, 1936, folder "Political: National—1935, August to 1936, April," box 474.
85. Josiah W. Bailey Papers: Josiah W. Bailey to J. G. Adams, August 13, 1935, folder "Tax and Tariff—1935, August to September," box 249; Julian Price to Josiah W. Bailey, August 6, 1934, folder "Tax and Tariff—1935, August to September," box 249; Josiah W. Bailey to George Roberts, August 31, 1935, folder "Tax and Tariff—1935, August to September," box 249.
86. Josiah W. Bailey Papers: Josiah W. Bailey to T. C. Coppedge, October 12, 1938, folder "Political: National—1938, October to November," box 476.
87. Patterson, Congressional Conservatism, 251. Josiah W. Bailey Papers: Josiah W. Bailey to Newton Baker, March 27, 1937, folder "Political: National, 1937, January to July," box 475; Josiah W. Bailey to R. L. Gray, March 2, 1937, folder "Political: National—1937, January to July," box 475; Newton Baker to Josiah W. Bailey, June 22, 1937, folder "Political: National—1937, January to July," box 475.
88. Josiah W. Bailey Papers, Josiah W. Bailey to Julian Miller, May 18, 1937, folder "Political: National—1937, January to July," box 475.
89. Andrew Seal, "What a Former Vice President Can Teach Democrats About Racial and Economic Inequality," The Washington Post, June 8, 2018, https://www.washingtonpost.com/news/made-by-history/wp/2018/06/08/what-a-former-vice-president-can-teach-democrats-about-racial-and-economic-inequality/?utm_term.7c322fe8380f.
91. Josiah W. Bailey Papers, Josiah W. Bailey to Thurman Chatham, August 9, 1935, "Tax and Tariff—1935, August to September," box 249; Josiah W. Bailey to Peter Gerry, September 30, 1938, folder "Taxes and Tariff—1935, August—September," box 249; Josiah W. Bailey to George O. May, November 23, 1937, folder "Tax and Tariff—September to November 1937," box 253. Aldrich, "Business Recovery and Governmental Policy," 167; Aldrich, "Stock Market From the Viewpoint of a Commercial Banker," 34. Kennedy, Freedom from Fear, 352–53. For support in the House, see "Favor Moderating Capital Gains Tax," New York Times, November 17, 1938; "Capital-Gains Tax and Change in View," New York Times, January 30, 1938.
92. Josiah W. Bailey Papers: Harry F. Byrd, Sr. to Josiah W. Bailey, August 25, 1936, folder "Political: National—1936, May to December," box 475; Josiah W. Bailey to George Gordon Battle, September 10, 1936, folder "Political: National—1936, May to December," box 475.
93. Josiah W. Bailey Papers, Josiah W. Bailey to John J. Raskob, March 17, 1933, folder "Political: National, 1933," box 474. Harry Flood Byrd, Sr. Papers: Harry F. Byrd, Sr. to John J. Raskob, August 18, 1934; John J. Raskob to Harry F. Byrd, Sr., August 21, 1934; Harry F. Byrd, Sr. to John J. Raskob, June 2, 1938. Moore, Senator Josiah William Bailey; Abrams, Conservative Constraints.
94. John J. Raskob Papers, Manuscripts and Archives Department, Hagley Museum and Library, Wilmington, DE, Files 319, 602, 1034, and 1934.
96. It is possible that some of the men in this circle were involved in the "shadowy Wall Street conspiracy to raise a private army to march on Washington" in 1934. See Fronczak, "Fascist Game."
97. Robert J. Cole, "John A. Coleman, Philanthropist, Big Board Chairman Dies at 75," New York Times, February 25, 1977, 36.
98. Patterson, Congressional Conservatism, 100–126, 197–206; Josiah W. Bailey Papers, Josiah W. Bailey to Mrs. Josiah W. Bailey, July 17, 1937, folder "Correspondence 1937," box 11.
100. Brownlee, Federal Taxation in America, 127, 134; King, "Redistributive," 35–36; Thorn-dike, Their Fair Share, 207–13; Josiah W. Bailey Papers, "Confidential: Transcript of Conversation of Senator Harrison and Mr. Morton on Federal Taxation," January 16, 1937, folder "Taxes and Tariff—1938, February to March," box 262; Harrison, "Our Tax Problems," 138.
103. Josiah W. Bailey Papers, "An Address to the People of the United States: A Declaration of Principles" (Overbrook Press, Stamford CT, December 1937), folder "Political: National—1937, December to 1938, February," box 475.
106. Josiah W. Bailey Papers: Josiah W. Bailey, "The Only Way to Real Recovery," December 20, 1937, folder "Political: National—1938, November—December," box 476; Josiah W. Bailey, "Radio Address at Raleigh," December 31, 1937, folder "Writings and Addresses, 1937–1938," box 20; C. B. York to Josiah W. Bailey, November 17, 1937, folder "Taxes and Tariff: September—November 1937," box 253. May, "Recovery and Taxation," 311; Rogers, "Fool's Paradise," 278; H. Styles Bridges, "Recovery, Morale, and Fear," 400.
107. Moore, "Senator Josiah W. Bailey and the 'Conservative Manifesto' of 1937," 38; Patter-son, Congressional Conservatism, 205; Kennedy, Freedom from Fear, 340–41; Josiah W. Bailey Papers, Charles R. Hook to Josiah W. Bailey, December 3, 1937, folder "Taxes and Tariff: 1937, December," box 253,
108. Josiah W. Bailey Papers: Josiah W. Bailey to Robert Doughton, December 2, 1937, folder "Political: National—1937, December to 1938, February," box 475; Glenn Munn to Josiah W. Bailey, December 3, 1937, folder "Political: National—1937, December to 1938, February," box 475; Edward G. Sperry to Josiah W. Bailey, February 1, 1938, folder "Tax and Tariff—February, 1938," box 254; Josiah W. Bailey to Edward G. Sperry February 8, 1938, February 1, 1938, folder "Tax and Tariff—February, 1938," box 254. Josiah W. Bailey Papers, folder "Tax and Tariff—March, 1938," box 254: Edward A. Foy to Josiah W. Bailey, March 22, 1938; Julian S. Myrick to Josiah W. Bailey, March 23, 1938; Charles H. Ohearn to Josiah W. Bailey, March 28, 1938; H. H. Schell to Josiah W. Bailey, March 23, 1938; Josiah W. Bailey to J. Howard Pew March 30, 1938; Percy C. Magnus to Pat Harrison, March 15, 1938; Henry M. Minton to Josiah W. Bailey, March 10, 1938; E. Victor Donaldson to Josiah W. Bailey, March 29, 1938; Nathan Ottinger to Josiah W. Bailey, March 15, 1938; Josiah W. Bailey to Jackson R. Collins, February 17, 1938; J. E. Sammond to Josiah W. Bailey, March 16, 1938; Vincent Bendix to Josiah W. Bailey, March 24, 1938; Frank Gerber to Josiah W. Bailey, February 14, 1938.
109. Josiah W. Bailey Papers, W. B. McElwey to Josiah W. Bailey, November 15, 1937, folder "Tax and Tariff—September to November, 1937," box 353.
110. Josiah W. Bailey Papers, Philip S.? to Josiah W. Bailey Chicago, November 18, 1937, folder "Tax and Tariff—September to November, 1937," box 353.
111. Josiah W. Bailey Papers, Thomas Horace Evans to Josiah W. Bailey, January 18, 1938, folder "Taxes and Tariff: 1938, January," box 253.
113. Patterson, Congressional Conservatism, 262–85; Josiah W. Bailey Papers, Josiah W. Bailey, "The North as A National Problem: Address at the Young Democrats Convention, Durham, NC," September 7, 1938, folder "Writings and Addresses, 1937–1938," box 20; Franklin D. Roosevelt, "The United States is Rising and Rebuilding on Sounder Lines: Address at Gainesville, GA, March 23, 1938," https://quod.lib.umich.edu/p/ppotpus/4926315.1938.001/208.
119. Brinkley, End of Reform. Josiah W. Bailey Papers, folder "Political: National—1938, June to August," box 476: Josiah W. Bailey to Walter F. George, June 17, 1938; Josiah W. Bailey to Harry F. Byrd, Sr., July 28, 1938; Walter F. George to Josiah W. Bailey, July 21, 1938; G. W. MacLamroch to Josiah W. Bailey, August 16, 1938; Harry F. Byrd, Sr. to Josiah W. Bailey, August 4, 1938; Peter Gerry to Josiah W. Bailey, August 7, 1938; Peter Gerry to Josiah W. Bailey, August 19, 1938. Josiah W. Bailey Papers, folder "National: Political—1938, September—October," box 476: Millard Tydings to Josiah W. Bailey, September 16, 1938; Harry F. Byrd, Sr., to Josiah W. Bailey, September 14, 1938; Josiah W. Bailey to James Farley, September 30, 1938; Josiah W. Bailey to Walter F. George, September 16, 1938; Peter Gerry to Josiah W. Bailey, September 28, 1938. Kennedy, Freedom from Fear, 346–49.
120. Josiah W. Bailey Papers, Josiah W. Bailey to United States News, November 8, 1938, folder "Political: National—1938, November to December," box 476.
122. Franklin D. Roosevelt, "We Are Getting More Practical Results in Bettering the Social Conditions of the Nation Out of Our Taxes Than Ever Before in Our History: Address of the President at Arthurdale, West Virginia, May 27, 1938," The Public Papers of the Presidents of the United States, https://quod.lib.umich.edu/p/ppotpus/4926315.1938.001/403.
123. Franklin D. Roosevelt, "Press conference with members of the American Society of Newspaper Editors, Washington, DC, April 21, 1938," The Public Papers of the Presidents of the United States, https://quod.lib.umich.edu/p/ppotpus/4926315.1938.001/317.
124. Franklin D. Roosevelt to Chairman Robert L. Doughton, April 13, 1938, The Papers of the Presidents of the United States, https://quod.lib.umich.edu/p/ppotpus/4926315.1938.001/257.
125. "Favor Moderate Capital Gains Tax," New York Times, November 17, 1937.
126. "Roosevelt's Letter on Profits and Gains Irks Congress," Wall Street Journal, April 14, 1938.
127. Brownlee, Federal Taxation in America, 133–8; Brinkley, End of Reform; Cowie, Great Exception, 118–20; Thorndike, "'The Unfair Advantage of the Few'," 46; Thorndike, Their Fair Share; Leff, Limits of Symbolic Reform, 255–93; Josiah W. Bailey Papers, Josiah W. Bailey to Herbert Hoover, October 19, 1938, folder "Political: National—1938, October to November," box 476.
141. Cowie, Great Exception, 143; Sparrow, Warfare State; Brownlee, Federal Taxation in America; Bank, Stark, and Thorndike, War and Taxes. Godfrey N. Nelson, "Eccles' Proposal for Tax Discussed," New York Times, March 25, 1945. NYSE archives, Emil Schram, "Address before the Advertising Club of Baltimore, July 11, 1945," in "Untitled Speeches 1945" folder, box 6, Record Group 2–2.
142. Emil Schram Collection, Indiana Historical Society, "History of D.C. and N.Y. Days Personal Recollections of Emil Schram," 7–8, recorded by Mary Schram, January 1973, transcript, folder 7, box 1.
143. Emil Schram Collection, Indiana Historical Society, "Interview with Emil Schram," 42, interview by Jessica Holland, June 8, 1984, transcript, vol. 1, folder 5, box 1. Quoted with the permission of the New York Stock Exchange.
144. Emil Schram Collection, Indiana Historical Society, "Interview with Emil Schram," 58, interview by Jessica Holland, June 8, 1984, transcript, vol. 1, folder 5, box 1. Quoted with the permission of the New York Stock Exchange.
145. NYSE archives, "Statement by Emil Schram, President of the New York Stock Exchange Before the Finance Committee of the Senate. August 7, 1942," in "Untitled Speeches 1941–2" folder, box 6, Record Group 2–2.
146. NYSE archives, Emil Schram, "Testimony Before Ways and Means Committee, March 20, 1942," in "Untitled Speeches 1941–2" folder, box 6, Record Group 2–2. "Text of Emil Schram's Statement on Capital Gains Before Senate Group," Wall Street Journal, August 8, 1942. NYSE archives: Emil Schram, "Postwar Horizons" in "Untitled Speeches 1943" folder, box 6, Record Group 2–2; Emil Schram, "Informal Remarks at a Dinner of Chicago Associations of Stock Exchange Firms, January 12, 1942" in "Untitled Speeches" folder, box 6, Record Group 2–2; "Statement by Emil Schram, President of the New York Stock Exchange Before the Finance Committee of the Senate, August 7, 1942," in "Untitled Speeches 1941–2" folder, box 6, Record Group 2–2.
147. NYSE archives, "Statement by Emil Schram, President of the New York Stock Exchange Before the Finance Committee of the Senate. August 7, 1942," in "Untitled Speeches 1941–2" folder, box 6, Record Group 2–2; "Schram Asks Cut in Capital Gain Tax" New York Times, March 21, 1942; NYSE archives: Emil Schram, "Informal Remarks at a Dinner of Chicago Association of Stock Exchange Firms, January 12, 1942" in "Untitled Speeches" folder, box 6, Record Group 2–2, Emil Schram, "Testimony Before Ways and Means Committee, March 20, 1942," in "Untitled Speeches 1941–2" folder, box 6, Record Group 2–2; Emil Schram, "Postwar Horizons," in "Untitled Speeches 1943" folder, box 6, Record Group 2–2. "Schram for Revisions of Capital Gains Tax; Says it Tends to Depress Stock Quotations," New York Times, November 27, 1941; "Capital Gains Tax Amendments are Urged by Schram," Wall Street Journal, January 13, 1942; "Schram Asks Cut in Capital Gain Tax," New York Times, March 22, 1942. For the Treasury Department's opposition to NYSE, see "Text of R.E. Paul's Statement on Capital Gains Tax Changes," Wall Street Journal, March 13, 1942.
148. Emil Schram Collection, Indiana Historical Society, "Interview with Emil Schram," June 8, 1984, 18–22. Quoted with permission of the New York Stock Exchange. George, "New Methods Required to Increase Federal Income," 273–74. Note that the bulk of Walter F. George's papers were destroyed: http://bioguide.congress.gov/scripts/guidedisplay.pl?indexg000131.
149. Emil Schram Collection, Indiana Historical Society, "Interview with Emil Schram," 52–55, interview by Jessica Holland, June 8, 1984, transcript, vol. 1, folder 5, box 1. Quoted with permission of the New York Stock Exchange.
154. NYSE archives: Emil Schram, "Informal off-the-record remarks by Emil Schram, President of the New York Stock Exchange at Connecticut Newcomen dinner, June 9, 1943," in "Untitled Speeches 1943" folder, box 6, Record Group 2–2; Emil Schram, "The Stock Exchange Today: An address delivered at a luncheon at Atlanta Rotary Club, May 10, 1943" in folder "Untitled Speeches 1943," box 6, Record Group 2–2; Emil Schram, "Speech Delivered at the Annual Dinner of Houston Chamber of Commerce, December 18, 1946" in folder "Untitled Speeches 1946," box 6, Record Group 2–2.
155. Harry Flood Byrd, Sr. Papers, John A. Morris to Harry F. Byrd, Sr., June 28, 1943, folder "1943–8," box 170.
156. Harry Flood Byrd, Sr. Papers, Hermann L. Brandt to Harry F. Byrd, Sr., February 8, 1943, folder "1943–7," box 170.
157. Harry Flood Byrd, Sr. Papers: "Byrd For President" folders, box 169; Harry F. Byrd, Sr., "We Are Losing Our Freedom," American Magazine (1943); Harry F. Byrd, Sr. "USA vs. The Frankenstein Monster," Readers' Digest (1943); E. F. Hutton to John Shepherd, Jr., August 5, 1943, folder "1943–5," box 170; E. F. Hutton to John Shepherd, Jr., August 13, 1943, folder "1943–5," box 170; John Shepard, Jr. to Admiral Richard Byrd, March 31, 1943, folder "1943–8," box 170; E. F. Hutton to Frank Gannett, April 23, 1943; Frank Gannett to E. F. Hutton, April 23, 1943.
158. Franklin D. Roosevelt, "State of the Union Message to Congress, January 11, 1944," http://www.fdrlibrary.marist.edu/archives/address_text.html.
159. NYSE archives, Emil Schram, "Informal remarks by Emil Schram at dinner for Governors of the Association of Stock Exchange firms in Richmond, VA, November 17, 1943," in "Untitled Speeches 1943" folder, box 6, Record Group 2–2.
160. NYSE archives, Emil Schram, "Informal off-the-record remarks by Emil Schram, President of the New York Stock Exchange at Connecticut Newcomen dinner, June 9, 1943," in "Untitled Speeches 1943" folder, box 6, Record Group 2–2.
161. NYSE archives, Emil Schram, "Remarks at the Annual dinner of the Houston Chamber of Commerce, December 18, 1946," in "Untitled Speeches 1946" folder, box 6, Record Group 2–2.
162. Emil Schram Collection, Indiana Historical Society, "Interview with Emil Schram," June 8, 1984, 58, 95–65. Quoted with permission of the New York Stock Exchange Archives.
165. It appears that the wealth of the both the median and the 90th percentile black household declined—and the racial wealth gap increased—in the later 1950s and through the 1960s. See Kuhn, Schularick, and Steins, "Income and Wealth Inequality in America," 26–28, 33–35.
167. Emil Schram Collection, Indiana Historical Society, "Interview with Emil Schram," 64–75, interview by Jessica Holland, June 8, 1984, transcript, vol. 1, folder 5, box 1. Quoted with permission of the New York Stock Exchange Archives.
168. Garrett Johnson, "The Battle in the Citadel of Capitalism," Huffington Post, March 18, 2010, https://www.huffingtonpost.com/garrett-johnson/the-battle-in-the-citadel_b_396590.html.
170. Emil Schram Collection, Indiana Historical Society, "Interview with Emil Schram,"93, interview by Jessica Holland, June 8, 1984, vol. II, folder 6, box 1. Quoted with permission of the New York Stock Exchange Archives.
174. Wall, Inventing the "American Way"; Fones-Wolf, Selling Free Enterprise; Kruse, One Nation Under God; Dochuk, From Bible Belt to Sunbelt; Prasad, Ronald Reagan and the Tax Cut Revolution; Cebul, "'They Were Moving Spirits'"; Glickman, Free Enterprise.
176. Congress of Racial Equality Southern Regional Office Papers, accessed through Pro-Quest History Vault, Daniel M. Friedenberg, "Real Estate Confidential," Dissent (Summer 1961) in folder "001355–002–0237, Regional Office, Projects—Housing, 1959 June—1962, Nov."
177. Schram, Jobs and Taxes; Schram, "Equity for Equity Capital," 557–58; Schram, "Taxation and Venture Capital"; "Capital Gains Tax of 10% Suggested," New York Times, November 20, 1947; "Increases Opposed in Capital Gains Tax," New York Times, February 22, 1951; "Capital Gains Tax is Kept Unchanged," New York Times, May 7, 1951; "Capital Gains Tax Cut Voted by Senate Panel," New York Times, March 12, 1957; "Big Board Study Shows Capital Gains Tax Cut Would Spur Investment," Wall Street Journal, November 9, 1961; New York Stock Exchange, Taxes, Equity Capital, and Our Economic Challenges.
181. NYSE archives, John Coleman, "Women's Role in the National Investment Economy: Remarks at 53rd Annual Founders Day Convention, College of New Rochelle, October 13, 1956," box 18, Record Group 2–2.
182. NYSE archives, Ruddick C. Lawrence, "Shares in America: A New Opportunity, a talk delivered before the Annual Convention of American Association of Industrial Editors," March 9, 1956, box 18, Record Group 2–2.
184. NYSE archives, G. Keith Funston, "A Nation of Shareholders: Address before the Los Angeles Stock Exchange, April 28, 1952," folder, box, G. Keith Funston Papers, Record Group 2–2.
185. See Figure 2 in Ott, When Wall Street Met Main Street; Traflet, Nation of Small Shareholders; Aitken, Performing Capital. In 1966, black families held only 1.9 percent of the nation's total household wealth, and only 0.1 percent of the value of all corporate stocks owned by U.S. households. See Browne, "Wealth Distribution and Its Impact on Minorities." Even in 2007, only 5 percent of the total wealth of all black households was held in the form of corporate stock. See Edward N. Wolff, "Deconstructing Household Wealth Trends in the United States, 1983–2016," http://wid.world/wp-content/uploads/2017/11/020-Wolff.pdf.
187. NYSE archives: G. Keith Funston to Honorable Harry F. Byrd, Sr., November 12, 1965, folder 2–7, box 3, G. Keith Funston Correspondence, Record Group 2–2; G. Keith Funston to Honorable Harry F. Byrd, Sr., March 16, 1964, folder 2–1, box 3, Group 2–2, G. Keith Funston Correspondence, Record Group 2–2; G. Keith Funston to Jacob K. Javits, June 23, 1964, folder 3–1, box 3, G. Keith Funston Correspondence, Record Group 2–2; G. Keith Funston to Colin F. Stem, July 7, 1964, folder 2–5, box 3, Record Group 2–2.
191. Mettler, Submerged State; Michelmore, Tax and Spend; King, "Tax Expenditure and Systematic Public Policy"; Berman and Pagnucco, "Economic Ideas and the Political Process"; Hertel-Fernandez and Martin, "How Employers and Conservatives Shaped the Modern Tax State"; Mozumi, "Tax Reformers' Ideas." Steuerle et al., Who Benefits from Asset-Building Tax Subsidies?; Woo, Rachemacher, and Meier, Upside Down; Batchelder and Toder, Government Spending Undercover.
192. Dawson, Blacks In and Out of the Left; Maclean, Freedom is Not Enough; Windham, Knocking on Labor's Door; Dawson, Behind the Mule, 15–44; United States Department of Commerce, Social and Economic Status of the Black Population in the United States, 25; Kuhn, Schularick, and Steins, "Income and Wealth Inequality in America, 1949–2016," 26–29; Pew Research Center, "On Views of Race and Inequality, Blacks and Whites are Worlds Apart"; Gittleman and Wolff, "Racial Differences in Patterns of Wealth Accumulation"; Bayer and Charles, "Divergent Paths."
193. Connolly, "Strange Career of American Liberalism"; Lassiter, "Ten Propositions for the New Political History"; Russell, Economics, Bureaucracy, and Race; Stein, Running Steel, Running America; Frymer, Black and Blue; Stainback and Tomaskovic-Dewey, Documenting Desegregation; Reed, Without Justice for All; Hinton, From the War on Poverty to the War on Crime.
196. For the shift from the discourse of white supremacy to that of "colorblindedness" and "meritocracy," see Yamahtta-Taylor, From BlackLivesMatter to Black Liberation; Lassiter, Silent Majority.
198. For some key perspectives on the entanglement of race with capitalism, see Robinson, Black Marxism; Du Bois, Black Reconstruction in America 1860–1880; Combahee River Collective, "Statement"; Melamed, "Racial Capitalism"; Fraser, "Expropriation and Exploitation"; Melamed, "Spirit of Neoliberalism"; Marable, How Capitalism Underdeveloped Black America.
200. Katznelson, When Affirmative Action Was White; Mettler, Dividing Citizens; Canaday, Building the Straight State; Moreton, "Fifty Shades of Green"; Cooper, Family Values; Zaloom, Indebted. For the New Deal working through private institutions: McCarthy, Dismantling Solidarity; Chapin, Ensuring America's Health; Klein, For All These Rights; Konings, Development of American Finance; Hyman, Debtor Nation.
203. Prasad, "Popular Origins of Neoliberalism"; Prasad, Starving the Beast; Mirowski, Road from Mt. Pelerin; Bergin, Great Persuasion; Jones, Masters of the Universe; Slobodian, Globalists; Amadae, Prisoners of Reason; Biebricher, Political Theory of Neoliberalism.
204. This figure includes the capital gains preference and the step-up basis for investments for inheritors. United States Department of the Treasury, "Tax Expenditures," https://www.treasury.gov/resource-center/tax-policy/Documents/Tax-Expenditures-FY2018.pdf. See also Stein, How The Government Subsidizes Wealth Inequality; Howard, Hidden Welfare State; Gravelle and Hungerford, Challenge of Individual Income Tax Reform; Pew Research Center, "Biggest Federal Tax Breaks."
205. Saez, Slemrod, and Giertz, "Elasticity of Taxable Income"; Kravitz and Burman, Capital Gains, Tax Rates, Stock Markets, and Growth; Burman, Labyrinth of Capital Gains Tax Policy; McClelland, Capital Gains; Congressional Budget Office, How Capital Gains Tax Rates Affect Revenues.
206. Saez and Zucman, The Triumph of Injustice; Moran, Race and Wealth Disparities; Asanti-Muhammad et al., "Road to Zero Wealth"; Traub et al., "Asset Value of Whiteness"; Darity and Myers, Persistent Disparity; McCall, Complex Inequality; Sharkey, Stuck in Place; Cashin, Failures of Integration; Conley, Being Black, Living in the Red; Tippett et al., Beyond Broke; Baradaran, Color of Money; Traub et al., Racial Wealth Gap; Wilson and Rodgers, Black-White Wage Gaps Expand with Rising Wage Inequality; Conley and Glauber, Wealth Mobility and Volatility in Black and White; Pager and Shepherd, "Sociology of Discrimination"; Hanks, Solomon, and Weller, Systematic Inequality; Hamilton, "Racial Equality is Economic Equality"; Kochhar and Fry, Wealth Inequality Has Widened; Wolff, "Household Wealth Trends"; Lui et al., Color of Wealth; http://racialwealthaudit.org.