Book Description

The Money Machines advances the provocative thesis that the mechanisms for financing state and local government in the Northern United States from 1860 to 1920 were deeply enmeshed with those financing the extralegal—often illegal—activities of the major political parties, complicating reform or change mandated by the post-Civil War breakdown of the North's legal fiscal machinery. Few reformers then recognized the interdependence of government and the party money machines; fewer still acknowledged the effectiveness or social value of the extralegal machines. On the contrary, basic fiscal reform in this period was characterized by attempts to exorcise "politics" in any form, which in turn provoked counteraction from politicians whose organizations had the same need for efficient, reliable revenue systems as did governments. Dr. Yearley demonstrates the failure of the established legal money machines to cope with the demands of postwar governments facing industrialization and urbanization. He characterizes the revolt of old and new middle classes against fiscal inequity and inefficiency and shows how much of the North's new wealth escaped taxation altogether while much of its old wealth similarly went into hiding. Because of its forbidding complexities, tax reform was sustained by a small group of experts from the middle class, whose sincerity and competence were unquestionable, but whose reformism evidenced the peculiar views and prejudices of their class. Here, therefore, the graft-grabbing politician is presented in a fresh light. In his efforts to maintain his sources of revenue and power, he emerges as a vital instrument of mass democracy, of the new politics of the ever-growing urban lower classes as well as their principal source of government welfare or support. The author reevaluates the Gilded Age politician in several important ways, principally regarding his power relationship to the business communities and his ability to perform his job well despite middle class disdain and continual allegations of fraud and incompetence. Further, Dr. Yearley shows that often politicians were ahead of reformers in their fiscal thinking in recognizing and utilizing taxation of income rather than of property. The volume considers in some depth several individual reformers, revealing them to be, among other things, prototypes of present academic experts used by government to manage problems too complex for laymen. The book then proceeds to explain essential changes made in local fiscal systems and which of these were to be the most effective, explanations that are of particular interest in view of the continuing crises in state and local financing today.