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Taxable Income in Utah, 1862-1872
Utah Historical Quarterly
Vol. 24, 1056, Nos. 1-4
TAXABLE INCOME IN UTAH, 1862-1872
BY LEONARD J. ARRINGTON
The American people have had three separate experiences with federal income tax laws. The first, which applied from 1862 to 1872, was originally devised as a means of raising revenue to fight the Civil War. The second, as passed in 1894 to meet depression deficits, was declared invalid by the Supreme Court before it had become fully effective. The third and present law followed ratification of the Sixteenth Amendment to the Constitution in 1916.
A study of Utah's experiences under the first federal income law is now made possible by documents which are preserved in the Bancroft Library and the National Archives. These documents consist primarily of assessors' tax lists and official correspondence. While income tax returns did not always disclose the entire income of taxpayers, and while there were doubtless many cases of tax evasion through failure to report (particularly among those in the lower brackets) and tax avoidance (by those in the upper brackets), available documents reveal interesting and informative data in relation to the incomes declared by Utah's pioneer citizens and the income structure of Utah's pioneer economy.
As signed by President Abraham Lincoln on July 1, 1862, the first law required citizens of states and territories to file an annual return on all income over $600. This income was subject to a tax of 3 per cent on all incomes from $600 to $10,600, while all incomes which were $10,600 or more were taxed at a rate of 5 per cent. To insure honesty and accuracy, the taxpayer was required to detail in the most complete fashion all of his sales, stocks of goods on hand, and other sources and indications of income. Income was defined as "the annual gains, profits or income of every person .... whether derived from any kind of property, rents, interests, dividends, salaries, or from any profession, trade, employment or vocation . . . " seems apparent that capital gains were to be taxed at the same rate as other income. Farmers were required to pay the tax on all their increase and gain, including increased value of livestock, grain, and other production, whether sold or on hand.
Only the flat $600 exemption for each income-earner was permitted; there were no additional exemptions for wives and children. However, the taxpayer was permitted to deduct national, state, and local taxes upon his property from his taxable income. He was also permitted to deduct the amount actually paid for rent of a dwelling house or estate, and the cost of customary repairs.
Tax legislation in subsequent years raised the exemption from $600 to $1,000, and later, to $2,000; and the rates which applied in 1863 were changed somewhat. A "special additional tax," amounting to 5 per cent of all taxable income earned in 1863, was added in 1864 to pay for soldier bounties. Effective rates on 1863 income were thus 8 and 10 per cent on incomes below and above $10,000 respectively. The essential provisions of the tax laws adopted between 1862 and 1872 were as follows:
Each person with an income in excess of $600 was required to file his return by May 1—later March 1—of the year following that in which income was earned. One method of preventing evasion and under-declaration was to encourage the publication of tax lists in newspapers and other media "that the amplest opportunities may be given for the detection of any fraudulent returns that may have been made." These instructions were not countermanded until 1870. When an assessor had reason to believe that a person's income was actually higher than his declared income, the assessor had the right to raise the assessment and levy a fine of 25 per cent (later 50 per cent) of the tax for "neglect," and a penalty of 50 per cent (later 100 per cent) in case of "willful fraud." Penalties of 5 per cent and up were required of delinquents.
There are a sufficient number of such penalties in Utah tax lists to indicate that the level of enforcement was pretty high. Widespread evasion and fraud seem to have been more characteristic of the response to the tax in the larger cities in the east than in the territories of the west. General Augustus L. Chetlain, who was Assessor of Internal Revenue in Utah from 1867 to 1869, later wrote that ". . . when the people of that Territory [Utah] made their returns to the United States Assessor they were, I believe, as fair and honest in making them as the people of any other state or territory."
Utah Territory comprised a separate revenue district for purposes of taxation, but the administrative machinery for collecting the income tax apparently was not set up in Utah until the spring of 1864 when returns were required on 1863 incomes. The law was dien administered, with changing provisions, until 1873, when the last taxes were paid on the incomes earned in 1871, and on which declarations were filed in March, 1872. Assessors in Utah were J. C. Little (1863-66), John E. Smith (1866-67), Augustus L. Chetlain (1867-69), and John P. Taggart (1869-73). As near as can be determined, some eighteen assistant assessors were hired by the Utah office during one or more of the years the Civil War tax was in force. Most of them were residents of the counties placed under their supervision. They included such locally-famous names as George W. Bean, James G. Bleak, George W. Bryan, William Budge, David Candland, Lewis S. Hills, John Kelly, Francis M. Lyman, W. B. Pace, J. M. Simmons, Arthur Stayner, and Walter Thompson. These assessors were also charged with collecting several excise and internal revenue taxes which were a part of the federal government's financial program. These included excises on spiritous and fermented liquors, tobacco, cotton, matches, and manufactures; licenses for the sale of liquor and tobacco; occupational licenses for physicians, lawyers, inn-keepers, and stallion-owners; taxes on the gross receipts of circuses, theaters, telegraph companies, railroads, and ferries; and taxes on bank deposits and note circulation.
The amount of personal income tax collected and assessed in Utah during the years the Civil War tax applied, and the total number of taxpayers, were as follows:
Utah's taxpayers—that is, those with an income of more than $600—represented 1.3 per cent of the total population of the territory in the peak year of 1865, which was slightly more than the percentage for the nation as a whole. This declined to around one-tenth of one per cent in 1871. Year for year, the percentage declaring incomes in Utah was about the same as for the nation, which indicates not only that the level of "cooperation" with the tax was about the same in Utah as in the nation, but also that Utah had about the same percentage of income-earners receiving less than the permitted exemption.
The small percentage of taxpayers demonstrates clearly that the tax applied largely on the wealthier persons in the various states and territories. Throughout the period 1862-72, more than 40 per cent of the total tax collected in Utah was paid by the ten largest income earners in the territory, and during the final year of the tax, 70 per cent of it was paid by the ten largest taxpayers.
Most of Utah's leading income-earners lived in Salt Lake City. Approximately 85 per cent of all tax payments made by Utahans were made by residents of Salt Lake City; the remaining 15 per cent was divided rather evenly between those living in settlements north and south of Salt Lake City. Next to Salt Lake County, Utah County had the largest number of persons declaring incomes. In the tax lists for May, 1865, for example, in which incomes for 1864 were assessed, 756 persons filed returns, of whom 215 were from Salt Lake County, 97 from Utah County, 89 from Sanpete, and the remaining 355 were, in order of importance, from Cache, Weber, Davis, Iron, Box Elder, Wasatch, Tooele, Washington, Beaver, Millard, Summit, Morgan, and Kane counties. In succeeding years, by far the greatest number of taxpayers resided in Salt Lake City. In 1872, the final year in which the tax applied, virtually all taxpayers were from Salt Lake City and Corinne.
The ten highest income-earners in Utah during the years 1862-72 are revealed by the tax lists to have been the following persons, listed in order of amount of taxes paid.
1. BRIGHAM YOUNG (1801-1877). Utah's pioneer religious, political, and business leader earned an average income of more than $32,000 during the years 1862-72, ranging from a low of $10,600 in 1863 to a high of $113,081 in 1870. Much of this income was from property held by Young in trust for the Church of Jesus Christ of Latter-day Saints, so not all of the income should be considered as his personal income. Nevertheless, President Young received an above-average income from his farms, urban real estate, mills, and interests in Zion's Cooperative Mercantile Institution, the Deseret National Bank, and other Utah corporations. By the time of his death in 1877, he had been president and leading influence in Utah's most important railroads, banks, manufacturing companies, mercantile houses, and irrigation enterprises. He left an estate valued at $361,170.
2. WALKER BROTHERS. Born in Yorkshire, England, Samuel Sharp Walker (1834-1887), Joseph Robinson Walker (1836-1901), David Frederick Walker (1838-19 ?), and Matthew Henry Walker (1845-1916), were brought to America in 1850 by their parents, who had earlier been converted to Mormonism. The death of their father in Council Bluffs, Iowa, forced them to make a living at an early age. Arriving in Salt Lake in 1852, they played a major role in the industrial and economic development of Utah during the last third of the nineteenth century. The four Walkers were in their twenties and thirties during the period of the Civil War tax, yet their collective incomes exceeded $300,000, for an average of more than $43,000 per year. Until 1869 this income was derived almost wholly from merchandising, in which they had gotten a start with army contracts during the Utah War. After the completion of the trans- continental railroad in 1869, the Walker Brothers invested heavily in mining, including the fortunate purchase of a one-fourth interest in the fabulously rich Emma Mine for $30,000. This interest was sold to eastern capitalists in 1871 for $1,500,000. Virtually all of their income in the early 'seventies, devoted toward building such imposing structures as the Walker House (a hotel). Walker Opera House, and Walker Bank, came largely from mining profits. The close union of the Walkers was dissolved in the 1880's, about the time of the death of "Sharp" Walker, who left an estate valued in excess of $396,000. "Rob" Walker then directed the manifold business and financial enterprises initiated by the brothers, giving financial support to the Liberal Party and other non-Mormon causes, as he had earlier given it to the Godbeite movement. At his death he left an estate valued at upwards of $616,000. David F. Walker moved to California, while Matthew Henry became president and principal owner of the Walker Bank and other enterprises in Salt Lake City, leaving an estate at his death valued at $985,000.
3. WARREN HUSSEY (1836-1920). Born on an Indiana farm and educated in a country school, Warren Hussey went to Leavenworth, Kansas, at the age of nineteen to join one of Russell, Majors & Waddell's supply trains bound for Salt Lake City. He left the supply train at Fort Kearny, Nebraska, and eventually landed in Denver, Colorado, where in 1861 he opened an office for the purchase of gold. In association with Charles Dahler, agent of Ben Holladay's Overland Stage Line at Denver, Hussey opened up a banking enterprise in Salt Lake City in 1865 which for eight years was Utah's leading financial institution. Hussey has the distinction of having received the highest income earned by any Utahan in any year covered by the Civil War tax. In the single year 1871, his declared income was $263,392. More than $100,000 of this large income consisted of dividends from his First National Bank of Utah, located in Salt Lake City. The remainder was partially earned on his branch banks at Ogden and Corinne, Utah, Virginia City and Helena, Montana, and at Denver and Central City, Colorado. Hussey also received a sizeable income from his investments in the Emma Mine and other mining properties. Although nothing approaching the 1871 figure, Hussey's income in other years, largely derived from banking, was substantial. His fortune was wiped out as the result of the panic of 1873 when his First National Bank of Utah failed. During the next few years Hussey alternated between Idaho, Colorado, Montana, and San Francisco, overseeing his branch banks and promoting mining development. From 1880 to 1883 he lived in New York City, buying and selling stocks and promoting some of his Leadville, Colorado, mining properties. In 1883, he set out for the Coeur d'Alene area of Idaho, where a new strike had been made, and established a bank in that frontier mining area. Called the Eagle City Bank, Hussey was its president, cashier, teller and janitor. The bank later became the Bank of Murray. When new discoveries were made near Kellogg, Idaho, Hussey opened the Bank of Wallace in 1886. Sensing opportunities in the growing Inland Empire region, Hussey went to Spokane in 1886 and organized the Spokane National Bank, which went under during the panic of 1893. During much of the present century, he was in New York where he dealt in stocks on Wall Street. All of Hussey's banking enterprises were primarily miners' banks, and Hussey himself could not refrain from dabbling in mines. It was thus that he made and lost two fortunes. In addition to his promotion of mining development, Hussey was also an energetic promoter of various civic, cultural, and business causes. In Utah, he assisted in founding the first non-Mormon (Episcopal) church, the first non-Mormon school (St. Mark's), and the first hospital (St Mark's).
4. WILLIAM JENNINGS (1823-1886). Utah's first bonafide millionaire, according to Edward W. Tullidge, was William Jennings. Son of a well-to-do Worcestershire butcher, Jennings left home in 1847 to seek his fortune in America. Through an amazing twist of circumstances, he met and married a Mormon emigrant girl in St. Joseph, Missouri, and took her to Salt Lake City in 1852. In response to Brigham Young's invitation he supplied meat to mining camps in Carson Valley, Nevada, in 1856, and later established Salt Lake City's first large butcher shop. A tannery and steam flour mill were later added to his enterprises, and in 1860 he acquired $40,000 worth of dry goods and entered into merchandising. In 1861 he contracted with the Overland Telegraph Company to supply poles for the line between Salt Lake City and Ruby Valley, Nevada. The same year he took a large contract to supply grain to the Overland Mail Company. He also secured most of the contracts for supplying Camp Douglas after it was established on the east bench overlooking Salt Lake City in 1862. Beginning in 1863, he carried on a banking and broker's business, being the first Salt Lake merchant to buy and ship Montana gold dust. Using some of his earnings, Jennings built the Eagle Emporium in 1864, which was Utah's first large department store. In this, and five branch stores, he is reported to have sold $1,000,000 worth of goods in 1864. His business was absorbed into Zion's Cooperative Mercantile Institution in 1869, and he was made superintendent, and later vice-president of that firm. He was also vice-president of the Utah Central Railroad, president of the Utah Southern Railroad Company, and president or director of many other Mormon concerns, including a tannery, woolen mill, bank, and cattle company. Always active in municipal and territorial affairs, he was mayor of Salt Lake City from 1882-84, and undoubtedly would have served longer had he not been disqualified as a polygamist under the Edmunds Act. He was reported to have been the largest tithepayer in the Mormon Church at the time of his death. His reported income averaged more than $21,000 during the years of the Civil War tax. While most of this income was invested in "home industry," he devoted much of it toward the purchase and maintenance of Devereaux House, Utah's finest residence, in which such personages as President and Mrs. Ulysses S. Grant, Vice-President Schuyler Colfax, and Generals W. T. Sherman and Phil Sheridan were entertained. He left an estate of $838,000 upon his death.
5. WILLIAM H. HOOPER (1813-1882). Like Jennings, Hooper also was an "outside" merchant who wed a Mormon girl and subsequently associated himself with the Mormons. Originally from Maryland, his father died when he was but three years of age. A series of unfortunate family and business experiences finally led him to the Mississippi River where he became a steamboat captain. He went to Salt Lake City in 1850 representing the important merchant firm of Holladay & Warner. Shortly after his arrival he fell in love with a Mormon girl and decided to make his home in Salt Lake City. He engaged principally in mercantile pursuits until 1859, when he was elected Utah's Delegate to Congress. Hooper served five terms during which he found time to invest in stocks of eastern merchandise which were retailed in Salt Lake City in partnership with Horace S. Eldredge. This business was exchanged for stock in Zion's Cooperative Mercantile Institution in 1869, Hooper becoming a vice-president, later superintendent, and in 1877 president of that institution. The firm of Hooper-Eldredge also initiated a bank in 1868 which eventually became the Deseret National Bank—an enterprise which in this century was acquired by the First Security System. He was also a director of the Utah Central Railroad. Hooper's income of a little less than $15,000 per year in the 1860's was considerably augmented by shrewd investments in Salt Lake City real estate in the 1870's. At his death his estate was valued at $277,000.
6. JOHN B. KIMBALL ( -1871). No relation to the prominent Mormon family of Heber C. Kimball, John B. Kimball was a friendly non-Mormon merchant in Salt Lake City. He was a brother-in-law of Henry W. Lawrence, with whom he established a partnership under the name of Kimball and Lawrence. This firm was reported to be selling $300,000 worth of commodities per year in 1865. Kimball's income averaged approximately $10,000 per year during the 1860's. He died leaving an estate valued at $175,000.
7. WILLIAM S. GODBE (1833-1902). Son of a cultured London family, William Godbe bound himself to a ship's captain while still a boy and sailed to many parts of the world. While completing his apprenticeship in Hull, England, he became converted to Mormonism, and worked and walked his way to Salt Lake City, where he arrived in 1851. In the 1850's and 1860's, while still a relatively young man, Godbe succeeded in establishing a prosperous commission business. Later he built an $80,000 wholesale and retail drug store in Salt Lake City and established several retail outlets in nearby towns. In the transaction of his business, Godbe crossed the Great Plains twentyfour times before 1869. Although a religious man (he was a president of the seventies of the Mormon Church), a practicing polygamist, and a friend and protege of Brigham Young, Godbe eventually rebelled against the dictatorial manners and temporal interventions of the Mormon president, and was finally excommunicated in 1869. He thus became leader of the group of Mormon dissenters known as "Godbeites." This, and the commencement of the ZCMI Drug Store in 1869, cost him the patronage of his drug enterprises. After disposing of his business, he claimed to have been left with a debt of $100,000. Thereafter, he played an important role in the development of mining and smelting in Utah and surrounding states, by which he accumulated a modest fortune. He was a founder and leading supporter of The Utah Magazine, its successor, the Mormon Tribune (later Salt Lake Tribune), and the Liberal Party. During the 1860's, Godbe's mercantile profits were spotty, but his tax payments from Utah nevertheless ranked seventh.
8. HENRY W. LAWRENCE (1835-1924). Lawrence was reared in a family which had been converted to Mormonism by Joseph Smith and John Taylor, when on a mission to Toronto, Canada, in the 1830's. The family moved to Illinois in 1838, where the father died. In 1850 the mother and children crossed the Plains to Salt Lake City, where, in 1859, Lawrence associated himself in a mercantile business with his brother-in-law, John B. Kimball. The firm of Kimball and Lawrence, along with that of the Walkers, Jennings, Godbe, and Hooper-Eldredge, became one of the five most important mercantile enterprises in the territory. A devout Mormon at one time, a polygamist, a bishop's counselor and territorial marshal, Lawrence became a follower of William S. Godbe, and was similarly excommunicated from the church in 1869. Nevertheless, he remained in Salt Lake City, became a candidate for mayor, cooperated in forming Zion's
Cooperative Mercantile Institution, engaged in mining activities, and continued with Kimball and Lawrence until the death of Kimball in 1871, after which he left ZCMI and Walker Brothers to divide between them the important mercantile trade of Salt Lake City. In 1890, he was appointed government receiver of the properties of the L. D. S. Church confiscated under die Edmunds- Tucker Act. Lawrence's reported income averaged approximately $8,700 per year during the years 1862-72.
9. HORACE S. ELDREDGE (1816-1888). Born in New York State, converted to Mormonism in 1836, Horace S. Eldredge joined die main body of the Mormons two years later in Far West, Missouri, migrated to Utah in 1848, and became a member of the First Council of Seventies of the Church in 1854—a position he held until his death. He served his church as purchasing and emigration agent in St. Louis for many years in the 1850's and 1860's; he likewise held a number of civic positions in Utah. His activities as church agent, which included purchases of livestock, machinery, supplies and provisions, gave him opportunities to invest, from time to time, in stocks of goods on his own account. He entered into a partnership with W. H. Hooper in 1859, and the two engaged in lucrative mercantile and banking operations in Salt Lake City in the 1860's. In 1865, Hooper sold his mercantile interests to H. B. Clawson, a son-in-law of Brigham Young, and the firm became Eldredge and Clawson. In 1869, this firm was absorbed into Zion's Cooperative Mercantile Institution, of which Eldredge became one of the original directors. Despite large losses in 1865 and 1867, Eldredge managed to earn an average income in excess of $7,500 during the period of the Civil War tax. In association with Hooper, he invested his earnings in urban real estate, Utah railroads, the Deseret National Bank, and other stable business properties. He left an estate of $542,000 at his death. Eldredge devoted most of the last years of his life to the service of ZCMI. He was its president in 1873, and its superintendent from 1876 to 1881, and from 1883 to his death.
10. JOHN W. KERR (18 7-1893). Kerr had gone to Utah in the 1850's as a clerk for the prominent early merchandising firm of Livingston and Bell. That firm disbanded upon the outbreak of the Utah War in 1857, and Kerr remained to take over the business. In 1864 he added banking and the purchase of gold dust to his business, and in partnership with Charles W. Durkee, Governor of Utah (1865-1870), and William Kiskadden, uncle of Maude Adams, he opened the Miners' National Bank which was the first national bank in Utah. Kerr and Durkee also imported trains of merchandise annually into the territory valued at upwards of $130,000. While their losses were occasionally heavy, Kerr's reported income averaged almost $7,000 per year. Largely deprived of profitable merchandising activity after the formation of ZCMI, Kerr, a non-Mormon, contracted to supply ties to the Union Pacific Railroad in 1869, dealt in livestock, and engaged in mining activities during the 1870's and 1880's. These appear not to have been particularly profitable. Kerr was one of many non-Mormon merchants who invested large sums in the development of Corinne as a possible business and political capital of Utah. He was president and a principal owner of the Corinne Mill, Canal and Stock Company, a $600,000 concern which owned, among other things, 90,000 acres of land, 26,000 sheep, 5,000 cattle, 1,000 horses, a ranch and a grist mill in the Bear River Valley. It was this company which contracted with James R. Bothwell to build the famous Bothwell Canal which irrigates much of the Bear River area. At his death in 1893, Kerr left an estate of $150,000 largely in various pieces of real estate.
If we can trust the Civil War income tax reports, these were the wealthiest people in Utah during the years 1862-72. Not among this group was General Patrick Connor, the so-called "Founder of Mining" in Utah. Connor either reported from another territory; or, as is more likely, his losses from uneconomic mining activities left his income below the reportable figure. Also not among the group was Alexander Toponce, who boasted of having cleared more than $100,000 on three transactions in 1867, $100,000 in 1868, and large amounts in succeeding years. Not among the group also were the various high officials of the Mormon Church. With the exception of Brigham Young, much of whose declared income was from the church property listed in his name, not a single general authority of the Mormon Church was among the ten highest income payers in any of the years covered by the Civil War tax. Of the twenty-eight separate persons who served as general authorities of the L. D. S. Church from 1862 to 1872, only two of them (Brigham Young and Lorenzo Snow) reported an income during each of the ten years; and only sixteen of them earned enough to pay a tax any single year out of the ten. Few of them left any sizeable property holdings upon their deaths.
In studying the lives of those who did achieve wealth, a common social pattern emerges. All ten were what might be called "self-made men." None of them had very much schooling. All ten started to work at an early age, usually as the result of the death of the father or other desperate family circumstances. All ten were what might be called adventurers; their commercial success was a matter of taking advantage of fortuitous opportunities. At least four were born abroad—the Walkers, Jennings, and Godbe, in England; and Lawrence in Canada. Only Young, Hooper, and Eldredge were definitely Yankees. Seven of the ten—Young, the Walkers, Jennings, Hooper, Godbe, Lawrence, and Eldredge'—were or came to be Mormons, but only Young and Eldredge were regarded as strictly "orthodox." Eventually, as noted, the Walkers, Lawrence, and Godbe were to apostatize from the faith they had earlier adopted. All ten leading income-earners were patrons of the arts and extremely proud of their cultural contributions. All of them were likewise interested in civic affairs, and held varying positions of responsibility in city, county, and territorial governments. Each leading income-earner seems to have had a high sense of responsibility toward his community and its citizens.
Of greatest significance, however, is the fact that virtually all of the leading income-earners were merchants. This reflects the failure to develop profitable industries in Utah. It also reflects the type of agriculture, which was based upon die small freehold, rather than on the plantation or ranch system in which large numbers of people worked for a few wealthy landowners. A study of the source of the incomes of the merchants further indicates that their earnings came largely from profitable trade widi the mining camps opened up in the 1860's in Idaho, Montana, Colorado, and Nevada. Significant amounts of wheat, flour, dried fruit, butter, salt and merchandise were shipped by Salt Lake merchants to these lucrative "outside" markets. Indeed, most contemporary observers reported that the territories surrounding Utah were largely maintained in the 1860's by Utah's exports. ". . . the amount of money invested in this business," wrote Samuel W. Richards in 1865, "is vastly enriching many of our citizens, as well as merchants who deal in importation." "There are many here," he continued, "who are able to pay Tithing on from fifty thousand to one hundred thousand dollars profit on one year's business; only one, however, has Tithed the latter amount to my knowledge, but many from the lesser amount upwards."
After 1869 and the coming of the railroad, of course, mostof the large incomes were from mining. The importance of mining profits after 1869 can be gauged from the fact that in 1871 almost half of all the income earned by Utah's taxpayers came from mining operations. The major reason for the absolute decline of mercantile earnings after 1869 would seem to have been the organization of Zion's Cooperative Mercantile Institution, which absorbed the business of such Mormon merchants as Jennings, Hooper, Lawrence, and Eldredge, and virtually destroyed, temporarily at least, the earnings of the apostate firms of Walker Brothers and W. S. Godbe, and the non- Mormon firm of Kerr and Durkee.
Many readers will be interested in comparing incomes in the 1860's and early 1870's with equivalent incomes in today's prices. It is well known that many prices today are considerably higher than they were ninety years ago. Just how much higher is subject to dispute, for comparisons of changes in the cost of living over such a long period are subject to a high degree of error. Not only do we consume many commodities which did not even exist in the 1860's, but the use made of commodities and their relative importance in the budget is vastly different. Studies that have been made of the national picture would seem to indicate that the nation's cost of living was about the same in 1913as in the period 1862-72, and that the cost of living has risen about 271 per cent since 1913. Thus, one would be led to believe that Brigham Young's $10,000 income in 1864 would be equivalent to $27,100 today. This assumes, of course, that the cost of living in pioneer Utah was about the same as in the nation, which is not necessarily true. No study has been made comparing the two, but there can be no doubt that the price of food and clothing was much higher in Utah than in the United States during the 1860's. On many items, Utah prices were more than double prices in the States. The price of flour in Utah, from 1862 to 1872, ranged from $6.00 to $15.00 per hundred; butter often exceeded $1.00 per pound; sugar ranged from 50 cents to $1.00 per pound, and coffee was almost always in excess of $1.00 per pound. Unbleached sheeting was almost $1.00 per yard, while broadcloth prints ranged up to 50 cents per yard. Coal— always a scarce item—was $50.00 a ton in 1865. Of course, rents in Utah were usually cheaper than the national average, as were the prices of vegetables. On the whole, it would seem to be a good guess that a $10,000 income in Utah in 1862-72 would be equivalent to no more than $20,000 in today's prices.
While the incomes of Utah's merchants and miners seem large by comparison with the bulk of Utah's pioneers (remember that more than nine-tenths of Utah's family heads received an income of less than $600 per year), they pale in comparison with those earned in the eastern part of the United States during the same years. According to Rufus Tucker, at least seventy-nine taxpayers in New York City reported 1863 incomes in excess of $100,000, as did sixteen in Boston. A. T. Stewart, owner of a dry goods store in New York City, reported an income of $1,843,000, while William B. Astor, Cornelius Vanderbilt, Moses Taylor, and LeGrand Lockwood, all of the same city, reported incomes well in excess of $500,000. This was the same year that Utah's top individual income was William Jennings' $14,600! And, of course, there were many equally high incomes reported from such centers of trade and finance as Boston and Philadelphia. The picture was the same in other years. In 1864, when Utah's top income was $29,646, the number in other parts of the nation reporting incomes more than $100,000 was higher in 1863. William B. Astor reported $1,300,000, and Cornelius Vanderbilt, Moses Taylor, and Simon Arnold all declared incomes in excess of $500,000.
Some observers have thoughtlessly referred to Utah's pioneer leaders as belonging to the same clan as the Robber Barons who strutted onto the national stage after the war between the states. Viewing the incomes revealed by the Civil War tax returns, one is forced to conclude that Utah's merchant princes were mere pigmies by comparison. One did not become a Robber Baron on an income of ten, twenty, or thirty thousand dollars per year. Nor is there any hint of the manipulation of stocks, trading on fictitious values, corruption of the judiciary, speculative promotional schemes, and other devices which made the Robber Barons both wealthy and infamous. Merchandising in the west involved huge risks—five of the ten leading merchants received negative incomes during one or more years of the 1860's —and the assumption of those risks required the incentive of comfortable profits in good years.
The tax returns not only point to the chief income-earners, but also reveal considerable information about the income structure of pioneer Utah. In this as in all other conclusions, we depend, of course, upon the accuracy and honesty of the returns. The following table gives the number of taxpayers in each of the income groups listed:
As the number of income-earners in Utah was approximately 8,000 in 1863, and grew to about 15,000 by 1871, one can say that about 95% of Utah's income-earners received an income of less than $600 per year, excluding, of course, their own farm and garden produce consumed during the year. Of those 5% who were above the $600 level, more than 70%, on the average, received incomes of less than $1,000, and more than 90% earned less than $2,000. Thus, the number of persons in Utah who were in the middle and upper income brackets was limited to a mere handful. Only six persons received an income in excess of $5,000 in 1863; this number increased to sixteen in 1864, but dropped to eleven in 1865 and 1866. Only after the coming of the railroad in 1869, and the opening up of mining and manufacturing, did the number in the upper brackets increase significantly. Some thirty-seven persons received more than $5,000 in 1871. Thus, there was not much income differentiation in pioneer Utah until after 1869. While there were only thirty-seven Utahans with an income above $2,000 in 1867, there were 162 such persons in 1871.
A comparison of Utah's income structure with that of the national income structure in the same years reveals that the distribution of income in pre-1869 Utah was much more equal than that of the nation as a whole. The following table gives a comparison of the distribution of income in Utah and the United States for the two years 1866-1867:
Since the proportion of persons receiving incomes below $600 (later $1,000 and $2,000) was roughly the same in Utah as for the nation, the higher percentage of persons in the upper income groups for the nation reveals a more highly stratified income-earning population. This is to say, the wealthiest people in the nation received a larger share of the national income than did the wealthy group in Utah of Utah's income. The greater proportion of persons in the lower categories in Utah—in 1866-67, 93 per cent of all Utah taxpayers reported incomes of less than $3,000—indicates that the bulk of the people of the territory had similar incomes. Striking evidence of the greater equalitarian tendency in Utah is found by plotting the income structures of the United States and Utah in the form of a Lorenz curve (used by statisticians to compare income distribution). The curve for Utah before 1869 shows much less concavity than that for the nation, thus bearing out the conclusion that there was less concentration of personal income in pioneer Utah than in the nation.
The most accurate device used by statisticians in comparing income distribution, however, is the Pareto curve. The number of persons in each income class is cumulated on an or more basis, and an ogive is plotted on double logarithmic paper. The steeper the slope, and the higher the figure giving the slope of the line, the more equal the distribution of income. Application of the method to United States and Utah data for the years 1866-67 results in a slope of 1.76 for Utah incomes, and a slope of 1.41 for United States incomes. Thus, the distribution of income was roughly one-fourth more equal in pre-railroad Utah than in the nation. Moreover, Utah's income was more equally distributed than the "Normal" posited by Pareto in his well-publicized "law." This law stated that the slope, at all times and places, will approximate 1.5.
The greater equality in the distribution of income in prerailroad Utah would seem to have been the result of the levelling influence of the frontier, and the social policies of the Church of Jesus Christ of Latter-day Saints. The lack of opportunities for gain, and the lack of accumulated property tended to reduce the great bulk of income-earners, not only in Utah but elsewhere in the west, to the common level of what they could earn with their own hands. Property incomes were rare and low. Moreover, the lack of accumulated capital caused most important enterprises, particularly in Utah, to be initiated and maintained on a group, church, or cooperative basis. The only exception to this was mercantile enterprises, and even these, after 1869, were largely cooperative in nature. Thus, if business profits were made, they tended to be divided among many persons. Mormon land policy also tended toward small holdings which were limited in size to what a man could farm with the help of his own family or families. Likewise, the Mormon emigration program was equalitarian, causing much of the surplus capital earned in Utah to be used under church direction for the emigration of the poor in Europe rather than for private investment in income-producing properties. Moreover, Brigham Young's home industry policy caused much of the earned surplus to be invested in industries which were, or came to be, uneconomic and financially unremunerative. Finally, the practice of polygamy tended to place families on a more equal footing, for a large proportion of Mormons in the upper income groups supported several families. Brigham Young, for example, with an average reported income of $32,000 per year in the 1860's, supported between fifteen and twenty families, with a total of between sixty and seventy wives and children. Thus the social policies of the dominant church tended to create an equalitarian society.
The coming of the railroad in 1869, however, set in motion forces which caused Utah's income distribution to become more unequal. While the distribution of income in the nation remained virtually unchanged, the very large incomes received by some Utahans from mining, smelting, merchandising and manufacturing caused the slope of the Utah curve to decline to 1.09 in 1871. This occurred because twelve people received half of all the income declared by Utah's taxpayers in that year. This does not mean, of course, that all of these high-incomes—all of these newly-earned profits.—were at the expense of the great mass of Utah's farmers and workers, for the number of persons in each income tax bracket actually increased. What it does mean is that most of the new income created in Utah as the result of the railroad went into the hands of a dozen or so merchants and mine proprietors. Since Utah's greater concentration after 1869 resulted from legitimate business profits, rather than from speculation or plunder of the Robber Baron variety, it indicates the higher level of production and employment which the coming of the railroad made possible.
Despite the greater concentration of income in Utah after 1869, it seems quite likely that the concentration was less than would have been the case without the organization of Zion's Cooperative Mercantile Institution. Under church sponsorship, ZCMI virtually caused the abolition of all high individual mercantile profits in the territory by absorbing the important retail and wholesale merchandising activity of Salt Lake into a concern dedicated to "reasonable" pricing policies and support of territorial industry. Perhaps the most interesting defense of this Mormon attempt to capture the mercantile trade of the territory was advanced by Mormon authorities in 1875. Regarding the events preceding the establishment of ZCMI and its string of local supporting cooperatives, church officials wrote:
Gentile and apostate merchants, of course, opposed this aggressive mercantile cooperative on the basis of immediate self-interest and libertarian economic philosophy. The ensuing dispute produced the Godbeite schism, the Liberal Party, and other divisive factions and interests. The important point to note here is the Mormon authorities were keenly aware of the growing inequality in income which the tax data evidenced, and ZCMI may have been conceived initially to check this trend. If it be remembered that the general authorities of the Mormon Church were not, as a rule, moneyed men, it becomes clear that one cannot interpret the Mormon-Gentile dispute of the late 'sixties and early 'seventies as simply a struggle for economic power between two opposing financial interest-blocs, each equally determined to eliminate the other as a commercial influence. Rather, the tax lists would seem to substantiate the thesis advanced by Edward Tullidge, "The issue of those times," he wrote in 1881, "was—Should she [the Mormon Church] hold her temporal power or lose it?— Should the vast money agencies which had grown up among her own people, in the country which she had settled, at length overwhelm her; or should she, by combinations of her own, place those agencies at her back and preserve her supreme potency?" Whether or not this was Brigham Young's estimate of the situation is, of course, difficult to say. That "vast money agencies" were threatening to grow up in pioneer Utah does seem to be borne out. With the establishment of ZCMI, however, the merchant, who appears to have dominated Utah's economy in the 1860's, was forced into a less influential position. In the decade after the coming of the railroad, the Church of Jesus Christ of Latter-day Saints and the more fortunate mining interests would appear to have assumed the leading role.
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