A Media Mogul’s Noble Challenge to Moguldom

In today’s monopolistic media environment, the E.W. Scripps Company doesn’t rate as anything close to a top-tier power. The Cincinnati-based TV and digital media provider’s main claim to fame these days may well be its sponsorship of America’s National Spelling Bee.

How inconsequential has Scripps become? Scripps CEO Adam Symson, the company reported earlier this month, only took home $1.9 million in cash and stock last year. The nation’s top seven media chief execs, by contrast, averaged $49.1 million in 2016, the latest year with stats available.

My, how the mighty have fallen. The Scripps company, back in the days of founder E.W. Scripps, rated as a major powerhouse on the American media scene. In fact, old E.W. invented the notion of the modern daily newspaper chain. He would not be pleased to see that his company has slid into second-tier status.

But old man Scripps would be even more displeased by how his namesake company handles CEO compensation, only not displeased in the way you might think. CEO Adam Symson’s $1.9 million — and the $3.9 million that went to his predecessor in his last year as the company’s chief exec — wouldn’t have struck Scripps as too little. He would have considered these millions much too much.

A century ago, newspaper publisher E.W. Scripps ranked as one of America’s fiercest egalitarians. The World War I years would see him help guide America’s first great national campaign to seriously tax the rich.

World War I more or less officially began for the United States on April 2, 1917, the day President Woodrow Wilson asked Congress to declare war to make the world “safe for democracy.” Only days before, on March 31, the Scripps-backed national organization that had led the push for peace — the American Union Against Militarism — had declared a war of its own. Against plutocracy.

The group’s activists announced they would now lead a new American Committee on War Finance. Their basic goal: to place the war’s financial burden on America’s most affluent.

“The strongest pacifist influence In America today,” the Chicago Daily News would report, has “suddenly turned from efforts to prevent war to means of financing it.”

The war’s financial burden, Scripps and his fellow activists believed, would be incredibly massive. To meet the bill for waging actual war in Europe, activists believed, the nation would either have to directly attack plutocratic power and tax the rich at significant rates or borrow from the rich, by selling war bonds, a policy choice that would likely leave the United States even more plutocratic.

The challenge this stark choice posed exhilarated E.W. Scripps. The war, he felt, would enable a thrust against plutocratic fortune that peace would never countenance.

“The country will be the gainer by tapping and reducing the great fortunes,” Scripps noted shortly after the American Committee on War Finance went public, “and once the people learn how easy it is, and how beneficial to all parties concerned it is to get several billions a year by an Income Tax, the country hereafter may be depended upon to raise most, if not all, of the revenues for the Nation, and the States, and the cities from this source.”

‘I dread the killing of men. I dread the syphilization of vast numbers of our men,” Scripps passionately continued, “but I gladly welcome the financial consequences of war.”

Summed up the publishing giant: “From the source which none of us have yet even dreamed of — that of the infliction of a great war — we may draw the greatest reform and the greatest blessings to our people.”

The American Committee on War Finance would be the progressive vehicle for realizing these blessings. Within weeks after the war’s declaration, the Committee had assembled a network of two thousand volunteers across the country, circulated tens of thousands of “pledge” flyers, and started publishing that pledge as an advertisement in America’s major daily newspapers.

Americans who signed the Committee pledge were committing themselves “to further the prompt enactment into law” of the boldest tax-the-rich proposal any American political grouping had ever advanced. They were demanding a cap on income, what the Committee would call “a conscription of wealth.”

No American, the Committee tax plan for the war proposed, ought to be able to retain after taxes “an annual net income in excess of $100,000,” almost $2 million in today’s dollars.

“If the government has a right to confiscate one man’s life for public purposes,” Committee chair Amos Pinchot explained. “it certainly ought to have the right to confiscate another man’s wealth for the same purposes.”

“Some of us have very large incomes,” E. W. Scripps added in a memorandum for the House Ways and Means Committee. “We employ servants who produce nothing for the common good, and only minister to our vices. We purchase costly and showy clothing, houses, food, furniture, automobiles, jewelry, etc., etc., the production of which has taken the labor of many hundreds of thousands of men and women, who, if they were not so employed would be producing other commodities in such quantity as to cheapen them and make them more accessible to the poor.”

“An enormously high rate of Income Tax,” Scripps argued, “would have the effect of diverting all this labor, what is given to practically useless things, into other channels where production would be useful to the whole people.”

The public reaction to the Committee’s income cap proposal would be quick and encouraging. Signed pledges, many accompanied by contributions, poured into the Committee’s office in Manhattan.

The letters came from the nation’s every corner. From labor came endorsements from the Brotherhood of Locomotive Engineers and the United Mine Workers. Agricultural leaders formed a Farmers’ National Committee on War Finance led by the secretary of the National Dairy Union and a past master of the Pennsylvania State Grange. From academia came a statement signed by 309 professors of economics from 47 colleges and universities, Cornell, Harvard, and the University of Chicago among them.

Even a New York banker — George Foster Peabody, a former Democratic Party national treasurer — signed on to the “conscription of wealth” cause.

By mid May 1917, the “conscription of wealth” campaign had completely redefined the nation’s tax-the-rich frame of reference. Less than a year before, after the passage of the 1916 Revenue Act, a top tax rate at 15 percent on the nation’s highest incomes appeared impressive. Now Americans were buzzing about the prospect of a 100 percent top tax rate.

“The people,” as Amos Pinchot testified to the Senate Finance Committee in May, “are solidly behind the movement.”

But Congress would not be. The war revenue bill finally enacted in October 1917 would deeply disappoint progressives. Everywhere they looked in the war funding legislation, they saw, at best, faltering half-steps toward effective progressive taxation. Instead of taxing the rich, they charged, lawmakers were relying much too heavily on borrowing from them.

Tax historians have generally not shared this harsh contemporary progressive judgment. The 1917 Revenue Act, they note, more than quadrupled the tax rate on income over $2 million, from 15 to 67 percent. A wealthy American who reported $300,000 in 1916 income paid less than $30,000 in federal income tax. That wealthy American’s tax bill, after the tax increase in the 1917 Revenue Act, would be almost $93,000 on the same income.

A significant hike, to be sure. But that wealthy taxpayer, under the “conscription of wealth” proposal, would have faced a $200,000 tax bill, over twice as much.

E.W. Scripps personally pushed for a pay cap even stiffer than the American Committee on War Finance’s proposal. Scripps wanted no one American to pocket more than $50,000 in annual income, a little over $1 million in today’s dollars, after paying taxes.

Scripps CEO Adam Symson made almost double in 2017, before taxes, what E.W. Scripps saw as the nation’s appropriate “maximum wage.” And Sympson, after the GOP tax cut enacted this past December, now faces a top-bracket tax rate of only 38.9 percent, a pale shadow of the 67 percent top rate Congress adopted in 1917 and just a hair over half the 77 percent top rate that Congress would go on to enact in 1918.

No, E.W. Scripps would not be pleased, not by the millions his company is shelling out to executives — and not by the soft-touch tax rate lawmakers have placed on those millions.

Sam Pizzigati co-edits Inequality.org. Among his books on maldistributed income and wealth: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970. His latest book, The Case for a Maximum Wage, will appear this spring. Follow him at @Too_Much_Online.