The Chicago Complex

The roots of a city's corruption

This circle would include, in the second place, certain classes of property that have enjoyed low assessments. It included vacant land, particularly subdivision property, until 1926, when criticism was directed against this practice. It has apparently included certain groups of hotel and theatre properties. But the class of property most conspicuously included in this zone of interest is made up of manufacturing and industrial property.

It is difficult to secure exact data here; but all the information available appears to indicate that the manufacturing industries, particularly the larger companies, have been more successful than most groups in keeping their assessments and taxes down. This has apparently been the case to a greater extent throughout the rest of the state even than in Chicago. It has been due, in part, to the difficulties inherent in the assessment of industrial property, particularly by local assessors entirely untrained for this difficult field of appraisal; in part to the fact that industrial assets consist largely of personal property of one form or another; in part to the presence of an aggressive organization equipped to look after the interests of its members; and finally, in large measure, to the competition of cities and communities for the location of new industrial plants. Even in the case of established plants, the constant threat to move is one of the most effective means for tempering assessments. It is difficult to learn of actual removals that have been made specifically on account of taxes, and probably such cases are rare; but the threat is none the less effective.

The consequence is that manufacturing industries are apparently escaping with a minimum share of property taxes. It is this situation that unfortunately identifies the interests of the manufacturers” associations with those of the present official and political groups and other allied groups who are profiting by present methods of assessment and will lose some of this advantage under any change in the system.

In addition to districts and classes of property benefiting under the present system is the wide list of individual beneficiaries scattered among all sections and all classes of property— the most numerous list of all.

What the aggregate financial interest represented by these various groups of beneficiaries might amount to, it would be impossible to compute. But the total of taxes remitted to favored groups has been shown to amount to some $30,000,000 annually. This would represent property with a full value of approximately $1,500,000,000. And this represents only real estate taxes on forms of property that could be caught in the process of real estate transfers. It does not include taxes evaded or reduced on large industrial and other types of property not objects of real estate transfer, taxes on personal property, or any of the indirect emoluments and advantages associated in one way and another with the whole system.

In addition to the ties of positive interest among the groups that have been enumerated, there is a very different but very influential economic element. This is the fear of retaliation at the hands of assessing officials. There are millions of dollars” worth of property and thousands of property holders, particularly among the larger property holders, held in a constant state of apprehension as to what is going to happen to their assessments from year to year. In the case of large office buildings and some other properties with heavy fixed overhead and a narrow margin of profit, a material difference in assessment may mean the difference between an operating profit and a loss.

In sharp contrast with the narrow margins upon which many properties must operate is the wide range of possible assessment available to assessing officials. The combination of the two things, narrow margins of profit and wide range of assessment, provides assessing officials with as arbitrary power over the property and fortunes of wealthy citizens as any Central American dictator could desire; and one who has not been in contact with the situation cannot realize what this fear of retaliation means in Chicago. It explains many things in the attitude and conduct of business leaders which outside observers are at a loss to understand. It secures political contributions, compels silence, and deters business men from serving on committees, participating in activities, or being in any way identified with movements directed against the present system.

Fortunately there are a few oases of business interest that would benefit through more or less substantial changes in the tax system. One of these is inhabited, in the main, by the owners of large properties in the Loop and downtown district, whose properties have been heavily assessed under the present regime. Another such oasis is peopled by certain real estate groups that have been driven in from the desert by the hard times there prevailing. The deflation of the real estate market has broadened the perspective of Chicago real estate groups; and, partly in consequence of intelligent and progressive leadership in the Chicago Board, these groups are now among the most vigorous advocates of constructive tax legislation.

A third group represents largely the owners of the newer hotels and apartment buildings on the North Side, whose properties have suffered severely from the overbuilding and excessive vacancy of the past two years. Almost any assessment on the basis of property values would have been a heavy burden upon their properties in terms of income. They have been antagonistic to—to reassessment, but have, logically enough been driven to the position of advocating an income tax.

A fourth element is represented by the banking groups, whose interests have been jeopardized by the threatened collapse of the city’s credit.

But the interest of these various groups in improving the tax system has for the most part been special and temporary The downtown building owners have been gratified with the results of the reassessment in lessening the discrimination against them— and most of them have been satisfied with this. Individual representatives of this group have been among the most conspicuous leaders in the movement for constructive reform. But as a whole the downtown property owners are more than satisfied with what has been accomplished for their own properties, and many are inclined to feel that anything more would be “going too far.”

The banking groups have raised millions of dollars and have worked with remarkable public spirit to preserve the solvency of the city’s credit, supporting particularly the emergency relief legislation enacted by the recent special session of the Legislature— but are apparently satisfied with this. The real estate groups are sharply divided, and are only partially following the broader leadership now represented by the Chicago Board. And so it goes.

IV

In addition to legal, political, and economic factors, there are certain social and psychological elements that go to make up the Chicago situation. These are much less tangible and obvious, and less generally admitted, but certainly not less important than the factors already enumerated.

The first has to do with the general level of political intelligence prevailing in Chicago. Much has been said and written about Chicago’s foreign population, unfamiliar with the language and ideas of America, and about its large Negro element on the South Side and in other sections of the city. The latter race particularly has been made to carry the onus of many local conditions— declining real estate values and others. Yet, so far as can be ascertained, there is nothing to indicate that these groups are, on the whole, less intelligent or capable than the general population of the country elsewhere. In business competition, in the acquisition of property, and in getting on in general, they have shown surprising capacity. Likewise, it would be ridiculous to assert that the people of Chicago are on the whole any less intelligent than the people of other American cities. Certainly their own achievements, and their own opinions, are to the contrary. And if there prevalent belief that the best brains have for years been drifting from the country and smaller towns to the larger cities, Chicago must have been greatly enriched by its growth of the past two decades. But while the attainments of the past decades are in every way a tribute to the brains and energy of the city, there is much to indicate that in one field, that of political intelligence, the people of Chicago are below the level of other communities.

We are speaking here not of political capacity, if that capacity were afforded adequate opportunity for development, but of political intelligence, in the sense of cognizance of political situations, relationships, and their more obvious implications. There are highly developed nuclei of group consciousness and group activities in Chicago, not merely in the form of the overrated “gangs,” but of trade, business, professional, and neighborhood groupings; and wherever politics can be reduced to a common denominator with any of these groupings it encounters a ready comprehension. The success of the present type of political leadership in the city is based largely upon the art of reducing political issues to the small denominations of these various groups. This is a Latin-American type of political consciousness, rather than Anglo-Saxon or European.

Anyone who will take the pains, systematically and conscientiously, to converse on political subjects with a hundred Chicago people, distributed throughout territorial, social, and occupational groupings, cannot fail to be convinced of the truthfulness of the characterization above. The writer is prepared to conduct observation tours through the smaller cities and towns of Ohio, Wisconsin, Minnesota, and elsewhere, where it can be demonstrated that the average inhabitant knows surprisingly more about political situations bearings, and relationships in the respective states and communities than does the average person in Chicago.

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