Fr. Charles Coughlin was pastor of a small church in Royal Oak, a northern inner suburb of Detroit. He mastered early on the new medium of radio, even before FDR, and amassed a huge following in the early depression years. He saw social salvation in the 1931 Encyclical of Pope Pius XI, Quadragesimo Anno (40 Years Later), an update of Pope Leo XIII's Rerum Novarum, 1891. He popularized those messages as never before. They bear an uncanny likeness to FDR's New Deal, much of it framed by Irish and other Catholics whom they touched through Coughlin. The story of Coughlin's sensational rise and tragic fall is told at length in Gaffney, 2000, Henry George, Fr. Edward McGlynn, and Pope Leo XIII. Suffice it here that Coughlin's Michigan springboard rocketed him so fast to national and international fame and influence and controversy that he had little role in Michigan.
Frank Murphy, Detroit's Mayor 1930-33, was "a New Dealer before there was a New Deal" (Sidney Fine, biographer, 1984), and helped elect FDR. By all accounts he was of high character and ability and ambition. FDR bundled him off to the Philippines as Governor-General (possibly to exile a potential rival?). Murphy returned to become one of Michigan's few Democratic Governors. During his tenure (1936-38) Walter Reuther's fledgling UAW pioneered the sit-down strike at GM's plant in Flint. Governor Murphy called out the national guard, but refused to authorize violence. Instead he negotiated a settlement that legitimized the UAW, using the new national Wagner Act. It was "The strike heard round the world". UAW membership exploded from 30,000 to 500,000. "Industrial unionism" had arrived to rival and later join the old AFL. Organized labor, for better or worse, has been a major political player ever since. Murphy went on to become A.G. in 1939, and then a Justice of the U.S. Supreme Court, but thus ended his role in Michigan.
Walter Reuther was a socialist from a socialist family, and a beaver who came up the hard way, organizing unions in a time of violence when employers controlled the police and the FBI. He survived beatings by strikebreakers, and two assassination attempts before finally falling to a third one in 1970. He couldn't get elected even to the Detroit City Council, yet TIME Magazine included him with the 100 most influential people of the 20th Century. He turned Republican Michigan into a union state, and his union into a major national political force. From 1939 he became a Democrat, increasingly on intimate terms with Party leaders. He never stopped supporting liberal causes (Martin Luther King, Jr., CÃ ©sar Chavez) until he was slain. Even today, it is said, Senate Republicans oppose bailing out Detroit auto-makers to avoid helping out Reuther's creation, the UAW.
All this time, with all this excitement, with boom and bust in the land market, Michigan fiscs depended mainly on the property tax. From 1932, other states were turning to sales taxes for "property tax relief", but not Michigan, not yet. Doughty Ben Smith of Grand Rapids, he who wrote about the U.P., churned out reams of essays and tables of data demonstrating that states progressed economically in the measure that they used the property tax to finance government. It is tragic he didn't live long enough to polish and package his works better; they were diamonds in the rough.
V. Detroit in the arsenal of democracy, 1940-50
After 1940, and especially after Pearl Harbor, FDR naturally turned to Detroit to convert its assembly lines and supply sources to war production. The whole nation revived, but Detroit grew by 14% while most cities grew by much less, and many shrank. This was the age of Rosie the Riveter, but Rosie favored Detroit over most other venues. Walter Reuther the anti-fascist converted to a Democrat; Reuther the German-American squelched wildcat strikes against the war effort; Reuther the born Marxist purged communists from his unions, joined the cold war, and rated high in Washington. He was a man for his times. It would appear that Detroit and Michigan were back on the fast track.
VI. Famous Governors and meager results, 1950-70
From 1950-60, Detroit shrank by 10%, the first break in its sensational upward trajectory. What could the matter be? "Explainers" could blame an exogenous force, the end of the war, but demand for autos and trucks was booming: America was pouring billions into the Interstate Highway System. The St. Lawrence Seaway was on track to open in 1959. The world was buying American cars. The causes must have been endogenous.
1952 brought on Governor G. Mennen "Soapy" Williams, scion of an old Detroit family (Mennen toiletries), handsome, personable, an academic "prodigy", eastern prep, Princeton, Michigan Law School, ambitious, cover of TIME, and presidential timber. Like Murphy, he won as a Democrat in a Republican state. In Michigan, party lines are fuzzier and politicians more temperate than in Wisconsin and Minnesota. (Ethnically, one might guess it reflects the Dutch temperament vs. the central European, but that is speculative.)
In 1952 the new Governor Williams allied with old warrior Reuther, and represented some of his views. He saw a need for more state services. Michigan had no state income tax at that time -- only half the states did, and Michigan's neighbors and competitors Indiana, Ohio, and Illinois did not (Hines, p.11). Taxing "business" may have sounded good to Reuther, the intellectual steeped in Marxist economics.
Williams' 1953 tax was called the Business Activities Tax (BAT). Technically it was an odd duck, a kind of modified VAT that "the business community" (as Professor Hines calls it) preferred to a tax on corporate income. If it and Williams' new welfare programs helped Michigan grow one could not prove it from Detroit's falling population. Michigan overall still grew, as Detroit was hollowing out; but Michigan grew slower than the national average, losing another Congressional seat. It stood still compared with, say, California. As for Williams he was shuffled off, like Murphy before him, to minor foreign posts. He came home and ended his career as Chief Justice of the Michigan Supreme Court. His lasting memorial is the long expensive Mackinac bridge, a 1950s version of a "bridge to nowhere", for it links the L.P. only with the barren U.P., which remains barren since it needs another kind of therapy.
The next famous Governor was George Romney, 1962-68, a hero because he had rescued American Motors by promoting the Rambler (although it was made in Wisconsin). Romney was a "liberal Republican" (as the term was then understood), loosely allied with Nelson Rockefeller who loaned him economic adviser George Gilder, co-author with Jude Wanniski of early "supply-side" works. He viewed Reuther as "the most dangerous man in America" because Reuther had a visionary and idealistic side, when Romney might better have sided with Reuther against primitive Jimmy Hoffa, Reuther's arch-enemy. Romney introduced an income tax to help support public schools and provide "property tax relief", a PR catchword that caught on in the times.
Meantime the property tax itself was degenerating, nationwide, into more of a tax on buildings, less on land, through confusion and corruption in the assessment process. One can trace this openly in professional and scholarly books and articles on appraisal and assessment -- material for another article. Manuals from the International Association of Assessing Officers (IAAO) grew increasing muddled. The John C. Lincoln Foundation, supposedly dedicated to advancing the ideas found in Progress and Poverty by Henry George, was devoting major funding to promote "Computer-Assisted Mass Appraisal" (CAMA)of buildings, but not of land values.
Detroit was assessing land values at next to nil, using assessments dating from the Great Depression (Andelson, 2000, p.163, citing James Clarkson, Mayor of Southfield), and no one was doing anything about it. Economists weren't even writing about it, not even talking about it. So Ben Smith's faith in the invigorating powers of property taxation had less basis than before, even as the property tax itself was being diluted with other revenues. One Michigan city, Southfield, made itself an outstanding exception with outstanding results, treated below.
Note in passing that the part of the property tax that falls on capital, bad as it is, is not as bad as taxes on income, sales, value-added, or business activity. The key word is activity. The property tax penalizes capital for standing still; the activity taxes penalize it for moving
The late 1960s saw riots related to race and civil rights in many cities, but Detroit's in 1967 were so bad that President LBJ sent in U.S. troops. Candidate Romney had courted blacks more than previous Republicans had, but he was a prominent leader in his Mormon Church. At that time (before 1978) this Church denied blacks full membership its ("priesthood"), and had a long if ambiguous and arguable record of discrimination in its sacred texts (blacks were "Lamanites"). That did not sit well in the new era of civil rights, although many other churches discriminated too, de facto.
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