The 125-Year Conspiracy
Henry George made it clear that he wanted utilities to be "managed by and for the whole people concerned,” using all three levels of government.
October 28, 2018
Rick DiMare
“With respect to monopolies other than the monopoly on land, we hold that where free competition becomes impossible, as in telegraphs, railroads, water and gas supplies, etc., such business becomes a proper social function, which should be controlled AND MANAGED by and for the whole people concerned, through their proper governmental, local, state or national, as may be.” Henry George, Paragraph 11, Platform of the Single Tax League of the Untied States, September 1890. (Emphasis added. See Doc #120 for the entire Platform.)

Henry George's wording of Paragraph 11 of the 1890 Platform was bitterly opposed by those who then wanted to monopolize the utilities (and other industries or “natural monopolies”). When Paragraph 11 first became Georgist “law” so to speak in September 1890, it was clear that George wanted utilities to be "managed by and for the whole people concerned,” using all three levels of government. This is an issue which still has great implications today, given the increasing rate at which vital human services are being privatized.

The Gilded Age monopolists, led by privateer J.P. Morgan and company, in the early 1890’s especially resented Henry George’s words "managed by” because they wanted to do the managing, which included the funding and profiteering of the utilities, by using their private bank credit, and not using the U.S. Notes which Juilliard v. Greenman (1884) had then recently declared to be a full legal tender currency. It would have been a nightmare for them if Congress had directly funded utilities using its new legal tender powers.

The monopolists found it acceptable that government "maintain and control" (see their revised wording below) the utilities with occasional regulation, and by providing services at the governments' expense, but THEY wanted to retain the power to own “and manage" the utilities and railroads, and they repeated called George a socialist or communist for wanting government to do it.

Anyway, the opposition quickly infiltrated the movement, and right under Henry George's nose, and against his wishes, had the words "managed by" removed at the second Single Tax Conference, held at the Columbian Exposition in Chicago on August 30, 1893. George voted against the change, but the majority won out.

The original wording you see above in Paragraph 11 was not restored until the 1912 Single Tax Conference, a restoration made by the Fels Fund Commission.

Here is their monopolist-friendly alternative wording of Paragraph 11, which was in effect from 1893-1912:

"In securing to each individual his equal right to the use of the earth, it is also a proper function of society to maintain and control all public ways for the transportation of persons and property and the transmission of intelligence; and also to maintain and control all public ways in cities for furnishing water, gas, and all other things that necessarily require the use of such common ways."

Note the substitution of the word "society" for "government." My source for this was Arthur N. Young's "The Single Tax Movement in the United States" (1916), Appendix A

As a side note, the main reason I wrote this Doc #168 is because of the date on which the change was made, August 30, 1893, which is about a month and a half before Henry George’s trusted lawyer, Thomas Shearman, proposed the “Just and Practicable Income Tax” before the Subcommittee on Internal Revenue in Washington, D.C. on October 16, 1893.

It had always bothered me that Shearman wanted to levy an income tax on natural monopolies in the October 1893 tax plan, rather than nationalize them, as Henry George insisted.

But a closer look at the dates explains why Shearman caved in. Shearman sought to tax rather than nationalize because the Georgist Single Tax League had lost the vote to keep the original wording of Paragraph 11 about over a month prior to his appearance in Washington.

Here is what Shearman says in Section 12 of the 1893 “Just and Practicable Income Tax:”

“[We should tax] all the profits of corporations owning railroads, canals, transportation privileges, telegraphs, telephones, pipe lines, mines, quarries, gas works, electric-light plants, steam-heating pipes, and, in short, all corporations have EXCLUSIVE PRIVILEGES of any kind whatsoever. In other words, we should TAX ALL THE INCOME WHICH IS DERIVED FROM MONOPOLIES, WHETHER NATURAL OR ARTIFICIAL. I am making no complaint about monopolies, and certainly for present purposes have no desire to enter upon a crusade against them. There is no question of their destruction involved. . . .

Under such a system there would be no proper place for any exemptions. Assuming that monopolies are necessary and even beneficial, yet there is no form of property which it is so clearly not only the right but the DUTY of the Government to tax. No matter whether the income which one derives from a monopoly is $100,000 a year or $100, he ought to contribute from that income to the support of the Government which gives and guarantees to him his source of income. It is not only fair and just that the Government should tax every species of monopoly or exclusive franchise, it is a crying shame that such incomes are not now and always taxed. These are, in fact, THE ONLY KINDS OF PROPERTY WHICH OUGHT TO BE TAXED, because they are the only valuable things which men do not create by their own industry. The Government creates and gives away these franchises. It may be convenient, and even necessary that it should be so; but none the less it ought to collect just as much of its revenue as possible from this source, before demanding any from other people, who have received no favor from the Government and who have earned every dollar of their income by their own skill and labor.” (emphasis by Shearman)

To conclude, it’s good that Henry George’s original wording of Paragraph 11 was eventually restored by the Fels Commission in 1912, but obviously the damage had been done by then, and monopolists had such a firm grasp on the utilities by 1912 (which would soon be funded by the new Federal Reserve System), that the restored wording of Paragraph 11 no longer bothered them.  

Find Out More.
Inside information on economics, society, nature, and technology.
Rick DiMare

Rick is a self employed attorney from Boston, Massachusetts. He graduated from Boston College and studied law at the Massachusetts School of Law at Andover. He also administers the Facebook group called Common Wealth Tax, which seeks to explore the (currently obscure) link between modern income tax laws and the Land Value Tax (LVT) advocated by political economist and “Greenbacker” Henry George (1839-1897).