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What We can Learn about Socialism from Civil War Reconstruction

Written By Briton Ryle

Posted March 24, 2014

One of the most hotly debated issues in America today – especially in this period of rebuilding after two market implosions and two financial crises in 13 years – is the growing division between the haves and have-nots, between the rich and the poor.

The latest Census Bureau report listed some 16 percent of Americans (50 million people) as living below the poverty line in 2013, up from 15 percent (47 million people) in 2012, representing an increase of 1 percent (3 million people) in a single year.

It is leading politicians across America to propose radical reforms to income tax, corporate tax, sales tax, and more to cover the ever increasing expense of social programs. But are they going too far? At what point does social assistance cross the line into outright socialism? Is this what America was founded on?

You might be surprised. A look into a similar time of rebuilding in America’s past – the reconstruction era after the Civil War – shows similarities to today’s rebuilding of America.

Today’s Reconstruction Era

High though the poverty rate in America is, poverty expert Sheldon Danziger, head of the Russell Sage Foundation social science research center, informs that “millions more people would have been poor… in the absence of our safety net programs.”

For instance, without Social Security programs for the elderly and the disabled, the poverty rate would be 25 percent, not 16. While 6.4 million people aged 65 and older are poor currently, without Social Security and medical expense coverage some 24 million seniors would be living in poverty – nearly four times more.

Poverty would be much worse without the generosity of wealthier Americans whose taxes fund sorely needed programs such as food stamps, subsidized school lunches, housing aid, government-covered medical care and more. For their assistance to lower income earners, the middle and upper income earners are indeed deserving of thanks and gratitude.

Yet despite such generosity on the part of wealthier Americans who come to the aid of their less fortunate compatriots, the problem of income disparity not only persists but is getting worse.

The number of unemployed in the United States is still an alarming 10.459 million as of last month, some 49 percent higher than the 7 million unemployed in pre-crisis 2007.

The persistent problem of poverty in America is leading some politicians to propose changing tax rates for corporations and individuals to preserve and expand those vital safety nets that grow increasingly more necessary.

Pennsylvanian Politicians Propose Tax Reforms

Today’s 16 percent poverty rate calculated by the Census Bureau is just the national average. “For most groups,” the report elaborated, “rates were higher than the official poverty rates.”

Much of the difference from state to state is due to job availability, the cost of living, and state-level income tax structures where eight states use a flat-rate income-tax system, 33 states use graduated systems which impose progressively higher rates as income rises, and nine states do not have broad-based income taxes at all.

The latest attempt to address income and social inequality is being made by Democratic candidates running for the next Governorship of Pennsylvania. Here are just a few of their ideas:

• $30,000 income exemption; anyone earning $30,000 or less would not pay any state income tax.

• Increase in state income tax from the current 3.07 percent to as much as 4 percent. Middle and upper income earners would pay more tax to cover the exemption to lower income earners.

• Expansion of tax forgiveness programs which refund taxes paid by low income earners. The end result is virtually the same as the tax exemption noted above with one important legal difference… where the tax exemption violates a Pennsylvania law prohibiting different tax rates among the population, tax refunds would not require changing the state’s constitution.

• A 5 to 10 percent tax on the net value of extracted gas after production expenses.

• Higher taxes on tobacco products including the new smokeless e-cigarettes.

• Closing the “Delaware loophole” which allows 70 percent of the companies that do business in Pennsylvania to avoid corporate income tax.

This increased tax revenue, coming from Pennsylvania’s gas companies and wealthier citizens, will go toward basic education from Kindergarten to grade 12, environmental protection, infrastructure improvements and medical services.

Sound like more Democrat-cultured socialism?

A look at an earlier national rebuilding during the post-Civil War reconstruction era from 1865 to 1877 shows that concerns over wealth distribution and income inequality have changed very little in over a hundred and thirty years.

Not So Different After All

Overseeing the last part of the Civil War reconstruction period, American President Rutherford Birchard Hayes (in office from 1877-1881) was very much shaped and molded by the rebuilding of the nation in his day as current President Obama is today.President Rutherford Birchard Hayes

A firm believer in meritocratic government, equal treatment regardless of race, and education as a right for all Americans, President Hayes penned some deeply moving ideals in his diary that are so similar to the concerns shared by Americans today that you would forget 128 years have passed since their writing in 1886-87.

Here are some notable excerpts from Hayes diary, as cited by the online encyclopaedia

• January 22: “How to distribute more equally the property of our country is a question we (Theodore Clapp and I) considered yesterday. We ought not to allow a permanent aristocracy of inherited wealth to grow up in our country… The object is to secure a distribution of great estates to prevent accumulation.”

• March 18: “At Toledo yesterday… I spoke of the danger from riches in a few hands, and the poverty of the masses… My point is that free government cannot long endure if property is largely in a few hands and large masses of the people are unable to earn homes, education, and a support in old age.”

• March 26: “Am I mistaken in thinking that we are drawing near the time when we must decide to limit and control great wealth, corporations, and the like, or resort to a strong military government?… Shall the railroads govern the country, or shall the people govern the railroads? Shall the interest of railroad kings be chiefly regarded, or shall the interest of the people be paramount?”

• May 12: “On the labor question… I agree that labor does not get its fair share of the wealth it creates. The Sermon on the Mount, the Golden Rule, the Declaration of Independence, all require extensive reforms to the end that labor may be so rewarded that the workingman can, with temperance, industry, and thrift, own a home, educate his children, and lay up a support for old age.”

• February 25, 1887: “As to pensions… No soldier… nor his widow nor his orphans ought ever to be forced to choose between starvation and the poorhouse. Lincoln in his last inaugural address… pledged the nation ‘to care for him who hath borne the battle and for his widow and his orphans.’ Let that sacred pledge be sacredly kept.”

• December 4: “…the danger which transcends all others is the vast wealth owned or controlled by a few persons. Money is power. In Congress, in state legislatures, in city councils, in the courts, in the political conventions, in the press, in the pulpit, in the circles of the educated and the talented its influence is growing greater and greater. Excessive wealth in the hands of the few means extreme poverty, ignorance, vice, and wretchedness as the lot of the many… We may reach and remove the difficulty by changes in the laws regulating corporations, descents of property, wills, trusts, taxation, and a host of other important interests, not omitting lands and other property.”

Of course, no one would accuse President Hayes – wounded 5 times as an officer in the Civil War, devoting more than a dozen years to public office afterward, and proud member of the Republican party for nearly 40 years up to his death – of being a socialist.

So how do we explain his views toward wealth, corporations, education, equal rights, and financial support to those of little means?

Perhaps we need to stop looking at those concerns as political in the first place.

Perhaps a nation in need of rebuilding, as America was in Hayes’ day and is again now, requires its citizens to view such concerns for what they naturally are – the promotion of the nation’s constitutional foundation, where liberty, justice and prosperity are the rights of all its citizens regardless of upbringing, race or social status.

Only when a nation can come together to deal with problems common to all from a neutral position will it be able to rebuild itself into a land of prosperity for all its citizens to enjoy for generations to come.

If the country needs something, it does not matter where or who it comes from, nor under what banner it is presented. Give the nation what it needs when it needs it, and all will be rewarded with stability and prosperity in return.

Joseph Cafariello