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City of Chicago Goes Bankrupt

(February 1930)

From The Militant, Vol. III No. 6, 8 February 1930, pp. 1 & 2.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Chicago, the “great” metropolis of the Middle West, is in a financial dilemma. Actually the city government, and the county government, too, have gone bankrupt, of course, without any official declaration being made. With thousands of workers tramping the streets in vain search for work this bankruptcy becomes but one more evidence of growing inability of capitalism to govern society.

Much excitement was stirred up throughout the city when by a majority vote the City council passed upon the 1930 budget, calling for an expenditure of $55,000,000. This was 7½ million below the last two years budget but claimed to be within the revenue of the city which has suffered an indebtedness of $13,000,000 during these last two years. Twice the mayor, the “famous” Big Bill Thompson, vetoed this budget merely to have it pass as often in a slightly amended form. But then the cuts necessitated layoffs. The first to come under the axe were 473 policemen. The excitement became a panic among the “better” citizens. Various rescue “Citizens Committees”, with which Chicago has been so much “blessed” in the past were again formed.

The “Poor Policemen”

Some of the “very best” citizens even thought it a damnable outrage that these alderman had voted a sum of $45,000 in the budget for their own automobile maintenance but would not appropriate enough to pay these “poor” policemen and thereby deliberately throw the city into “darkness and crime”. Last year by their own efforts these “best” citizens had succeeded in adding 750 huskies to the city’s force, and now – that seemed to have been all in vain – who would protect their property?

Meanwhile, 40,000 city employees are running far behind in wages. County employees have been voted a cut of 10 months pay for one years’ work. These are the white collar workers being hit. In addition many white collar workers and regular city and county maintenance workers have been laid-off, increasing the ranks of the unemployed. The city government is short of funds because the large property owners, the big corporations have paid no taxes for 1928 and 1929, awaiting a reassessment of tax valuation. The city government in its pinch is peddling tax anticipation warrants to such bankers and corporations willing to take them over, receiving an interest of 6 percent. This interest paid by the city now amounts to $36,000 per day. Even at this handsome return the corporations have been very unwilling to buy. But now a ray of “hope” appears. The Down Town Property Owners Association has declared its willingness to take over $10,000,000 worth of such warrants, to be returned in tax payments when the reassessment some day shall be completed. Meanwhile they collect 6 percent on their own tax payments they are thus withholding.

As an example of tax valuation in Chicago, it suffices to mention a couple of instances – not, however, those of workers who happen to own a shack, and are assessed up to the hilt. The Union Stockyear company is assessed, upon its property covering 135 acres, a valuation of $11,000 per acre, making a total of less than a million and a half for taxation. The company’s own appraisals, filed by the Department of Agriculture, shows a claimed valuation of $130,000 per acre, amounting to a total of $18,000,000. The Stevens Hotel claimed a property valuation of thirty one million dollars for bonding purposes; on the tax books it stands at a valuation of eleven million. These are but two examples.

Tax Valuation Cut

In 1926 and 1927 a big campaign started in the city, supported by the A.F. of L., for a reassessment of tax valuation to catch these big tax dodgers. A reassessment was finally granted, and although not yet completed, has already resulted instead of catching any dodgers, in further cutting tax valuations from 1927 to 1928 by over $400,000,000. The big down town properties alone cut over $300,000,000 with none of these taxes paid as yet. Injunctions, suits and political manoeuvering keep this money in the pockets of the exploiters. As one City Hall authority stated significantly to a newspaper reporter in regards to the fight stirred up over the budget:

“The finance committee group (who fought for the cut) will win a victory or two. The mayor will save his face. The appropriations may be a million or two above the estimated revenue, but no more. The battle was decided in advance by the bankers.”

Oscar Nelson, the alderman who carries a union card, vice President of the Chicago Federation of Labor and floor leader for the Big Bill Thompson administration in the city council, has voiced aspirations to become candidate for mayor in the Spring elections. But such change of personality would mean not the slightest break in the continuity of capitalist politics. The Chicago workers are, of course, not so much stirred by the budget fight, one way or the other. While they could, by acting politically in their own name and using their own mass power, easily catch some of these big thieves and tax dodgers, their real task will still remain ahead until they chase all the capitalist politicians out.

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