THE INCOME TAX.

Extract From the Speech of Scott Wike, of Illinois.

Hon. Mr. Wike said:

In my judgment a very heavy graduated income tax should be levied, not on incomes simply, but on incomes of fortunes, to stay the insatiable hands of fortuneseeking adventurers who aim really more to gratify a vaulting ambition to belong to the aristocracy of gigantic wealth, with the attendant fascination of power, than from any rational desire or hope to enjoy or make useful these unreasonable and unholy amassments.

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When these colossal fortunes were unknown in this country, pauperism, too, was in a measure unknown; but now destitution, poverty, and want prevail in a ratio of geometrical proportion as the property of the country is concentrated in the hands of a few. Already the unsightly piles of wealth look down with ever increasing menace to the perpetuity of the simple and popular government that was devised to secure the blessings of liberty and prosperity to the masses.

Figures give no adequate idea of the common understanding of the immensity of hundreds and thousands of these fortunes, or the rapidity with which they are amassed. For example, if Adam, created in the beginning, and which was recently popularly supposed to be five thousand years ago, had been endowed with what seventy-five years ago would have been considered a large fortune-$50,000-and had doubled it the first year, and had lived and added to it a like amount annually from that day to the present time, saving it all, he would not yet have accumulated the princely fortune that at least one family possesses, or which, perhaps, is possessed by several separate families and individuals in this country to-day.

Incomes, both in numbers and amounts, in the United States far exceed those in Great Britain, and the increase in wealth has been infinitely more rapid here than in that country. Since the adoption of the present revenue system and bounty policy, the concentration of wealth in the hands of the few is unprecedented in any country. The extent to which this concentration has been going on since the war is not only alarming, but in the light of the ultimate consequences is absolutely ap palling. It is now maintained that one-half of the wealth of the country is already concentrated in the hands of 25,000 persons, and three-fourths or four-fifths of it in the hands of 250,000 people.

The question of the concentration of wealth and the extent of such concentration becomes a very important one in considering the utility and desirableness of the income tax.

Let us see, therefore, if we can, whether these statements as to the extent of such concentration are true or not. In the absence of official information we must examine the most reliable data at hand, and to this end attention is invited, in the first place to the statements and statistics published in the Forum Magazine for September and November, 1889, by Mr. Thomas G. Shearman, one of the foremost economists of this country, as furnishing perhaps the clearest and most convincing analysis and exposition of the question that has been written.

STATISTICS SHOWING CONCENTRATION OF WEALTH.

Your attention is first called to the following statements, made in the September magazine article alluded to:

"The St. Louis Globe recently published a list of seventy-two persons who were worth, collectively, the whole amount of our national debt, averaging $18,000,000 each. The wealthiest railroad manager in America in 1865 was worth $40,000,000, but not more. His heir died recently, leaving an estate of nearly $200,000,000; and there are several gentlemen now living who are worth $100,000,000 each. Within a short period a number of quiet, unobtrusive men, of no national fame, have died in Pennsylvania, leaving estates of over $20,000,000 each. Twenty living persons in the oil business are reputed to be as rich. Forty persons could be easily named -none of them worth less than $20,000,000, and averaging $40,000,000 each.

"At the lowest reasonable estimate there must now be more than two hundred and fifty persons in this country whose wealth averages over $20,000,000 for each. But let us call the number only two hundred. Income-tax returns in Great Eritain and in the United States show that in general the number of incomes, when arranged in large classes, multiplies by from three to five fold for every reduction in the amount of one-half. For extreme caution, however, we estimate the increase in the number of incomes at a very much lower rate than this. At this reduced rate the amount of wealth in the hands of persons worth over $500,000 each in the United States would be about as follows:

"This estimate is very far below the actual truth. Yet, even upon this basis, we are confronted with the startling result that 25,000 persons now possess more than half of the whole national wealth, real and personal, according to the highest estimate ($60,000,000,000) which any one has yet ventured to make of the aggregate amount."

In the November article mentioned a statement is made of the wealthiest estates in England, showing the richest of the Rothschilds and the world-renowned banker, Baron Overstone, each left about $17,000,000. Earl Dudley, the owner of the richest iron mines, left $20,000,000.

The Duke of Buccleuch (who carried half of Scotland in his pocket) left about $30,000,000. The Marquis of Bute was worth, in 1872, $28,000,000 in land, and he may now be worth $40,000,000 in all. The Duke of Norfolk may be worth $40,000,000, and the Duke of Westminster perhaps $50,000,000.

The table of incomes derived from the profits of business, exclusive of railways, mines, etc., in Great Britain, is also given, as follows:

Then follows this statement:

"The great law of average may be relied upon as confidently in America as in Europe. We need only find a starting point, then we may safely proceed to calculations based upon general experience as to the average, increase in the number of persons owning wealth, in proportion to the decrease of the amount owned by each individual. To find this starting point it will be necessary to give a list of Americans whose wealth is approximately known."

After which are given the names of seventy individuals, with an estimate of the wealth of each, aggregating $2,700,000,000, and averaging over $38,500,000. Mr. Gould, the Vanderbilts, and Rockefeller are put down as worth $100,000,000 each, and Drexel, Morgan, and Marshall Field $25,000,000 each, while I have no doubt that popular opinion and the facts place them at a much higher figure, if in fact not doubt these amounts.

In discussing the moderation of his own estimates, Mr. Shearman says:

Making the largest allowance for exaggerated reports, there can be no doubt that these seventy names represent an aggregate wealth of $2,700,000,000, or an average of over $37,500,000 each. The writer has not especially sought for information concerning anyone worth less than $20,000,000, but has incidentally learned of fifty other persons worth over $10,000,000, of whom thirty are valued in all at $450,000,000, making together one hundred pe sons worth over $3,000,000,000. Yet this list includes very few names from New England and none from the South. Evidently, it would be easy for any specially well-informed person to make up a list of one hundred persons averaging $25,000,000 each, in addition to ten ave aging $100,000,000 each. No such list of concentrated wealth could be given in any other country in the world. The richest dukes in England fall below the average wealth of a dozen American citizens, while the greatest bankers, merchants, and railway magnates of England cannot compare in wealth with many Americans."

According to the facts as here stated, one hundred and ten persons own $3,500,000,000 of the national wealth, or nearly one-seventeenth of the whole, leaving out of the calculation public property.

The writer then goes on to say that lists were lately published of sixty-seven millionaires residing in Pittsburg, of sixty-three residents of Cleveland pos-essing in the aggregate $300,000,000, and sixty persons residing in three villages near New York city whose wealth is said to aggregate $500,000,000, and in fact $750,000,000, and that the Goelet estate in New York city paid taxes on $25,000,000 real estate. The mayor of Chicago is given as authority that four gentlemen in that city are worth over $20,000,000 each.

MR. T. E. WILSON'S ESTIMATES.

Confirmatory of the accuracy of the estimates here placed upon individual fortunes and of the statements relative to the rapidity with which vast wealth is concentrating in the hands of the few, I beg to submit and call your attention to two

lists of names furnished me by Mr. T. E. Wilson, the very able statistician and economic writer of the New York World. One of these lists shows the names of one hundred and twenty-five individuals in the city of New York whose incomes each amount to $250,000 and over, and the other contains the names of three hundred business houses in that city, and including none from Brooklyn, that are each rated by the commercial agencies at $1,000,000 and over. These lists, which I hold in my hand, were published in the New York World, and so far as I know the accuracy of the ratings has never been questioned, while the source from which they emanate entitles them to implicit confidence.

Of course many of the incomes alluded to must exceed by very many times the amount stated, $250,000, some of them rising, no doubt, to a half score of millions. If these incomes were accumulated by interest on bonds or money loaned, dividends on stocks, and net rentals of real estate, then the recipient of a $250,000 income, it is fair to presume, would be worth anywhere from five to ten million dollars, while numbers of the millionaires in New York are estimated to be worth from $40,000,000 to $250,000,000-forty women alone being worth in that city an average of several million dollars each.

It is evident, therefore, that there must be a very large number of millionaires in the city who are not included in the list of individuals mentioned. And it is apparent also that the wealth of many of the business houses given must be greatly in excess of $1,000,000. So that it would be very interesting and profitable, indeed, to know just how much the wealth of all the millionaires and millionaire establishments in New York city aggregates, and Mr. Wilson will have a most valuable contribution to the cause of revenue reform he so ably advocates when his researches in this prolific field of inquiry shall be completed.

The probability is, if the facts could be accurately ascertained, that the individuals, companies, corporations, and trusts worth $1,000,000 and over throughout the United States would aggregate from one-fourth to one-third of the entire wealth outside of public property.

MR. SHEARMAN'S STATEMENT CONTINUED.

Mr. Shearman, proceeding with his argument, declares that the official tax list of Boston shows that more than fifty families pay taxes on over $1,000,000 each, and that two hundred pay taxes on amounts clearly indicating that they really are millionaires, and says:

The facts already stated conclusively demonstrate that the wealthiest class in the United States is vastly richer than the wealthiest class in Great Britain. The average annual income of the richest hundred Englishmen is about $450,000; but the average annual income of the richest hundred Americans cannot be less than $1,200,000, and probably exceeds $1,500,000. It follows inevitably that wealth must be far more concentrated in the United States than in Great Britain; because where enormous amounts of wealth are placed in a few hands, this necessarily implies that the great mass of the people have very small possessions.

The writer then observes that in 1877 two hundred and twenty-two thousand British capitalists possessed over $25,000 each, while the number of persons deriving profits of over $1,000 per annum each was nearly two hundred thousand, while these two classes of people are not at all the same, not more than one-fifth to onethird of either class being included in the other, but that in the absence of detailed information the classification of the distribution of wealth must be taken with much reserve. He then proceeds to say:

But incomes, in their very nature, are much more equally distributed than wealth. Millions have incomes who have practically no wealth. Therefore, a computation on this basis will greatly underestimate the concentration of wealth in the higher

figures while it will lead to such an overestimate of wealth in the lower figures as to make it gradually quite mis eading. Such a computation is indeed of no use whatever outside of the firs: two h indred and fifty thousand families, and must be greatly modified long before reaching that number.

Bearing these considerations in mind, we proceed to estimate the distribution of American wealth.

Taking the number of British incomes exceeding £200 as a basis for comparative classification, starting on the basis of known facts concerning American wealth and modifying the figures gradually, for the reason already stated, we arrive at the following conclusions:

Distribution of American wealth on the basis of British income returns.

From this table it will be seen that by adding together the possessions of fifty thousand of the richest families they own one-half of the wealth of the country, not taking into account the public property.

Considering the above table so as to arrange it in three great classes, we arrive at this result:

In considering the foregoing table Mr. Shearman states that the number of the very largest milionaires has been kept down to nearly the limit of his personal information, while in his judgment there must be at least as many more of whom he has never heard, and says:

"If this surmise is correct, it would add at once $2,500,000,000 to the share of wealth belonging to the millionaire class, and would confirm the writer's rough estimate in the Forum for September, that 25,000 persons own just about one-half of all the wealth of the United States."