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Chicago - Believe It or Not

ISSUE:  Summer 1930

Chicago is shooting it out as a substitute for thinking it out. Her debt is low, her financial record clear, yet no banker will lend her a penny. Her Chicago Plan is a model to the world yet she cannot finish improvements already begun and indeed the backbone of the plan has become a bone of contention. Her universities have gathered a remarkable aggregation of economists, tax experts, and political scientists but they write Sanskrit for a population that has barely learned its political abc’s. All the conventional characters are at hand: the fat and villainous politicians, the sleek and villainous magnates and bankers; every one of them acting his traditional role with the fidelity of a movie scenario. Yet at least once during the past two years, which this essay seeks to survey, a determined amateur has “muscled in,” broken up the show, and made an octette of the strongest political forces jump through the hoop of a reform which is in advance of the corresponding governmental technique in nine out of ten American cities.

The more picturesque manifestations of all this communal incompetence, of course, are the “rackets,” the beer-wars, the murders and the gangsters, whose doings have long been the stock-in-trade alike of pious editorial moralists and skit writers of the Broadway reviews. Regarding these sores, Chicago maintains two schools of thought: one declares that while such things are bad, they are not much worse than elsewhere, that the publicity which they have received is to blame. The other school demands a radical “clean-up.” The Chicago Association of Commerce actively and simultaneously takes both positions. But in his daily round, your average Chicagoan does not often come into direct contact with the rackets or the gang warfare. Quite a number of people you know have been held up during the past six or eight years (roughly, let us say, about as many as those who have been getting themselves divorces), but two out of three of these friends of yours report that their bandits, like their bootleggers, displayed excellent manners. Harsh and relentless towards other “mobs” they may be from all accounts, but suavity itself to the cash customers. “It’s a tough racket, ma’am, but we gotta do it,” or “Sure, keep the carfare to get home”—such are the ceremonious phrases of banditing: so well established are they that they may expect to receive the sanction of a future edition of Emily Post in an added chapter on “How to Behave in a Stick-up.”

In short, your Chicagoan recognizes that violent crime is only a symptom. Liquor, gambling, and to a minor extent, prostitution are profitable hut illegal businesses. Hence the inevitable “alliance of politics” with crime, regrettable but entirely endurable if only politics would confine its profit-seeking to such sources and devote the rest of its attention to the normal functions of government.

But politics has done just the opposite. Not satisfied with merely the “honest graft,”—the normal tithe to ward heelers, “experts,” favorite contractors—it has started to absorb just as much of the entire dollar as it can. A bond issue is voted for a street widening project. So much of it is diverted to expert “fees” and contractors “extras” that not enough remains to compensate the property owners and complete the work. So there follows a supplementary bond issue. Every automobile pays a vehicle tax, ultimately supposed to flow as gravel and asphalt into the ruts in the streets. But much of it goes to “license inspectors” and “sidewalk inspectors,” and the payrolls lengthen and the ruts deepen.

It is needless perhaps to point out that under this management even such constructive projects as a Tammany administration might undertake are not pushed. Since 1927 the street cars have been operating under Federal receivership, not because they are “broke”—they are extraordinarily profitable—but because their franchises have expired; because there are rival groups, among them the Elevated Lines controlled by Mr. Samuel Insull,* struggling for domination; because the earnings which under reorganization would flow out as interest and dividends are in the meantime swelling the deposits of the banks whose officials compose the Protective Committees; and because the City Administration has so far felt that the traction issue as a campaign football has a higher usefulness than the mere pick-ups which would present themselves from the extensions and subway construction that would follow upon a financial settlement.

Even minor matters are handled on the same basic principle; they are pigeonholed until all possible profits are surveyed. Thus the development of Lake Calumet into an industrial harbor waits until a special tax can be spread over the whole city and the property owners in Calumet benefit accordingly. The municipal airport is wretched, yet it cannot be improved until the City Administration can agree with the School Board appointed by itself with regard to the relinquishment of said School Board’s title to the site.

The long suffering Chicago River, having once had its current reversed, is now being shifted bodily to another and straighter bed south of the downtown “loop” area: a gigantic task nearly completed. It will open up an entire blighted area and permit new arteries to the south and west. Yet

*A valuation far in excess of its capitalized earnings was placed upon the Elevated Lines by the Illinois Commerce Commission. A Senate Investigation Committee headed by Senator James Reed of Missouri elicited from Mr. Insull that he had contributed substantially to the campaign for Republican nomination for Senator, of Frank L. Smith, Chairman of the Illinois Commerce Commission. Mr. Smith was elected over the Democratic nominee and a “protest” independent Republican candidate, but the Senate refused to seat him. In the April primaries of this year, however, he was nominated as Congrcssman-at-largc for Illinois.

the railroads, although they agreed to re-locate their yards, are now nullifying the completion of the project through refusing to get together on a plan for terminal development. It looks like another opportunity to fish in troubled waters: at any rate, again Chicago finds herself impotent.

Any government moves slowly enough. But even a bureaucracy finally does move. Chicago has just demonstrated that incompetence and graft together can block all movement whatsoever and produce an actual breakdown in governmental functioning.

But the greatest and handsomest of these prerogatives of local politics has been the tax-fixing racket. Real estate, vacant lots, bungalows, apartments, office buildings,—everything is by law to be assessed at its full value. Actually, as in most cities, the average has been much less—in Chicago, one-third of the full value. But individual assessments have varied from five per cent to one hundred per cent. In other words, properties at one end of the scale have been assessed at twenty times as much as those at the other. Through these discrepancies half the taxpayers paid about thirty, million dollars a year in taxes which should properly have been carried by their more fortunate or more provident neighbors. The customary charge for tax-fixing, over the four-year period, was one-quarter or one-third of a year’s savings, or a reasonable equivalent in political kind (votes, etc.) in lieu of cash. The lucrative possibilities of such a system are obvious. Naturally, under it, Brown’s bungalow was taxed higher than Jones’; Jones’ higher than Robinson’s. For a long time all three failed to catch on; Jones had seen his precinct captain and kept knowingly silent in the happy delusion that he was getting away with something; Brown knew that his property was worth more than the assessment and not realizing the general average was only one-third of the full value, was afraid that he might be raised. A general impression prevailed that the small house owner was being favored at the expense of the big properties, “so better say nothing about it.” But in 1927 taxes suddenly jumped up to where they really hurt. And the State Tax Commission suddenly came to life. To fit the picture, the Chairman of this Commission should have been a learned economist or at least a dour and righteous fiscal administrator. He was nothing of the sort, but a hold-over from the previous defeated State Administration, a rubicund and (when necessary) fighting Irishman. The squawk of the taxpayer resounded in his ears, echoed by the indignant denunciations of the newspapers which zealously printed each day pictures of identical bungalows or flat buildings one of which was taxed at some three times as much as the other. Mr. Malone, the State Tax Commissioner, struck. He invoked a provision which had long existed in the law of the State but which had never been put into effect. He ordered a reassessment of each and every one of the 1,300,000 parcels of real estate in the county. This order automatically invalidated the existing assessment, for no more taxes could be levied upon it, or at all, until the new assessment was completed.

A stroke of the pen destroyed the legal basis of taxation on which rested annual budgets of two hundred millions, from which forty thousand public employees were paid, and which ensured service of bond issues aggregating over a third of a billion dollars.

At first politicians, bankers, and business men were not merely dumbfounded by this order—they simply refused to believe it. Taxes had last been collected in April, 1928; the reassessment order was issued in July but every device of political and legal oppositions was invoked, and not until the autumn was a trained appraiser appointed Director of Reassessment and a staff organized. Then the politicians woke up with a bang: tax collection day was only six months away and no prospect of collecting taxes. To the “big business” men of the city, gathered in a closed session of the elite Commercial Club, the politicians rushed with appeals for aid: this silly, expensive reassessment engineered by the reformers must be abandoned, else catastrophe would follow. The big business men were duly stirred up. There was a great public airing of the whole situation.

But the results were most unexpected. The big business men went into the law and discovered that the reassessment was valid. It must be completed, not abandoned, or no taxes. And such of them as were bankers made a still more shocking discovery: they held millions of “tax-anticipation warrants” or paper issued by the city against taxes to be collected. (Among other delinquencies the city had gradually slipped through over-expenditure from a pay-as-you-go basis to borrowing against next year’s tax-collections to pay most of this year’s bills. The banks had been happy to accommodate the city, for it paid four per cent cr better, borrowed not as it needed funds but in bulk, and left most of the money on deposit at oniy two per cent.) But next year’s taxes could not be collected until the slow-moving reassessment was completed, and the bankers, instead of some choice short-term paper, found masses of frozen and indeed slightly tainted assets on their hands. Overnight they met and voted a quarter of a million dollars to pay the salaries of expert appraisers to expedite the reassessment. This immediate action was desirable and the banks escaped scot-free from public criticism, whatever may have been said privately by one banker to another, for seldom have those supposedly wise in the ways of the world been caught more completely napping to what was going on right under their noses. Or perhaps “those who sup with the devil shonid use a long spoon.”

A coolness now prevails between the bankers and the politicians. But the politicians remain recalcitrant albeit their demarche resulted so unexpectedly and so disastrously, in driving their former friends into the arms of the reformers. By every conceivable means, in defiance of the entire press, they have sought to discredit and delay the reassessment. The bankers, their vaults full of frozen assets, refuse to buy any more of the city’s paper. The city borrowed from all its trust funds and finally, about Christmas, simply stopped paying salaries.

In the meantime, a Citizens’ Committee of leading business men, slightly tinctured with reformers, was standing by, proffering aid upon certain terms. With the banks it had privately arranged to save the city’s exterior credit by, meeting bond interest and maturities. Payless pay days for police, firemen, school teachers, and other employees passed by. Each side stood pat: the Citizens’ Committee counting on public pressure and the public servants’ demands for pay; the Thompson Administration playing on fear of disorder if police, fire, or essential services were interrupted. Finally a compromise. The City asked for aid but the Committee did not insist upon actual control or even the pruning of overloaded (albeit somewhat curtailed) political payrolls. Instead, it accepted the Administration’s assurance of co-operation in promoting “remedial legislation”— to establish sound local finance and prevent such disorders in the future—at an impending special session of the Legislature.

There is a sensational public drive for seventy-four millions to carry the city through until July. The old Liberty. Loan methods, the occupational quotas, are invoked and the drive goes over the top. But the contributors are mainly the larger industries. The man-in-the-street all along was sure that “something would happen” to save the situation without any particular activity on his part, And it did. Opinions vaiy on the policy of the Citizens’ Committee (or the Strawn “Rescue” Committee, as it is more generally called from the name of its originator and chairman). Perhaps they were wise to compromise with a discredited but still powerful Mayor and Council, all with a year and a half to go in office. Perhaps they lost a mighty opportunity for heroic action in an extraordinary situation. Perhaps when the Legislature assembles the Thompson Administration will double-cross them as neatly, as it has formerly outsmarted at least certain of the members of this self-same Committee.

The reassessment which tied up taxes for two years and precipitated the current crisis was conceived for a much more limited objective, i. e., the equalization of the tax burden. This is seemingly a simple matter but it is one not attained in many cities, although rarely are conditions so outrageous as they were in Chicago. Thanks to the politicians who protracted it over two years instead of one, it has exposed every other weakness in the local governmental machine—weaknesses most of which exist elsewhere but of which Chicago has probably the most complete and perfect collection—a veritable gallery of governmental freaks. Appropriations exceed income. There are over four hundred local governmental taxing bodies, most of them boards and commissions with overlapping membership, some appointed, some elected. There are two or three elections every year; at the recent primary the names of some two hundred candidates appeared upon the Republican ballot. The election law is so lax that frauds abound. Yet with all this electing, a curious bi-partisan system practically deprives the voters in many, districts of a choice for the State Legislature. The members selected by the machine are obviously unfit and give point to the unwillingness of downstate to a re-districting (long overdue under the State Constitution) which would give Chicago increased representation. This deadlock over representation has defeated all attempts to revise the State Constitution along modern lines.

Political factionalism is as complicated as the local government. In fact, the newspapers themselves are often unable to announce to which faction candidates for minor offices belong. The more respectable local Republican wing is headed by Senator Charles S. Deneen. Despite a good past record and considerable shrewdness, Deneen is a man of little personality or public leadership: while a consistent enemy of Thompson, he is prone to “trades” and people support him and his ticket from a sense of duty or as the lesser of two evils. At the April primary he met with a sensational defeat at the hands of Ruth Hanna McCormick, widow of former Senator Medill McCormick, whom Deneen had defeated six years before. Mrs. McCormick is a dynamic campaigner with a long and carefully cultivated down-state following. In Cook County, supported by the Tribune (owned by the McCormicks), Hearst, and the City Hall, her strength was surprising. Partly on her momentum, partly through Deneen’s poor strategy, partly through the general cussedness of the electorate, most of the City Hall candidates were successful against their more “respectable” rivals on the Deneen slate. Thompson has thus regained much of his strength lost at the “voters uprising” of two years ago.

The strength of “Thompsonism” derives from ward politics, from the negro influx, and from a strain of corruption and viciousness which has cropped out and perpetuated itself from the days of Yerkes and later of Lorimer. “Big Bill” himself for the past year has been an enigma. A million-dollar judgment for money misspent during his previous administration hangs over him and much of his personal fortune is posted as bond in a final appeal still pending before the Supreme Court of Illinois. Nothing was made public, but his disappearance a year ago following this judgment seems to have been due to a nervous breakdown from which he has now recovered. Regarding Thompson, any prediction is simply impossible. Such a man may be “down” but he’s never “out.” Who can foresee the career of a genius, even if it he that of a genius for imposture?

The Democrats locally are more united under the leadership of Tony Cermak, the powerful President of the County Board. Between two terms of Thompson the Democrats gave the city a clean administration but politically a bungling one. Cermak is the nearest approach to a Tammany leader of the better grade. A thoroughly practical politician, he has the foresight not to charge more than the traffic will bear. He has introduced and stood strongly for “efficiency methods” in certain departments under his administration: his enemies say, “in the departments which he does not control.” Lie is receptive to suggestions from disinterested citizens. He is very wet. As a candidate for Senator in 1928, he got nowhere downstate but ran ahead of Al Smith’s strong vote in Chicago. He is anathema, of course, to the drys, and unfortunately, also, perhaps partly due to his foreign birth, to a considerable number of “respectable voters.” He is a strong possibility for Mayor. While his enemies have so far failed to make good on many of their charges against him, there have been a few times in the political past where he failed to look quite far enough ahead.

The Hearst papers supported Thompson in the past and still support the faction allied with him. However, Thompson’s present campaign issue, “Robbed by reformers—300 millions taken off the Loop and loaded on to the small home owner,” places them in an equivocal position on account of the friendliness of the local Hearst manager, Roy D. Keene, to Malone, the State Tax Commissioner who ordered the reassessment. The strong Evening News is intelligently but heavily virtuous. The Tribune is brilliant but erratic. For a time it had a curious alliance with Crowe, the State’s Attorney„ generally assumed to be based upon getting the crime news first, although even then it was repeatedly “scooped” by the News, which has always covered crime with remarkable knowledge. But the Tribune has long fought Thompson: in fact it secured the judgment already mentioned against him and others. Its violence, its repeated editorial tirades on a variety of pet phobias (ranging from prohibition to the World Court, the rest of Illinois, the neighboring states of Wisconsin and Ohio, New York, Great Britain, and Europe generally), have aroused distrust and disgust among many of its readers. “The best way to put anything over is to have the Tribune against it.”

There is a large neighborhood and foreign press, largely gullible, inadequately informed, and pro-Thompson. A large proportion of the intelligent population votes in the suburbs. Under whatever improved form of government it may get, Chicago will long carry the burden of entrenched local leadership and powerful ward politics.

The Citizens’ Committee roughly represents the executives of the railroads and of the greater industries, who have up till now refrained from intervention in local politics—some of whom, in fact, have “gone along” with Thompson. It may be expected to get the huge floating debts funded; to establish budget legislation and assessment machinery which will function regularly, and not as an emergency. In short, the Committee may have the city in solvent condition for the next administration in 1931. What more will it do?

The elements which support the present effort can thereafter keep up a firm pressure for a general overhauling like that in Baltimore or Cincinnati. Or they can wash their hands of it and turn the job back to the energetic but inadequate standing reform organizations. If they take the former course they can and will demonstrate as was done in Baltimore the service which “Big Business” can render a city. If they stop at their immediate objectives, Chicago will remain—to transpose Senator Grundy’s expression— an economically important but politically backward city. Taxes will hamper business, public improvements and transportation will lag behind the city’s needs, while the public schools will continue a bone of contention.

Can political handicaps check Chicago in the realization of her manifest economic destiny of which the projected World’s Fair of 1933 is to be a symbol?


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