Review of the Book

A Financial History of Maine
by Fred Eugene Jewett

Joseph Dana Miller

[Reprinted from Land and Freedom, May-June 1938]

Joseph Dana Miller was during this period Editor of Land and Freedom. Many of the editorials published were unsigned. This one is signed by Mr. Miller.

"Come with me and I will show you with how little wisdom mankind is governed," said the Swedish statesman. Come now with Professor Jewett and observe with what insensate folly the affairs of a state are directed. We doubt not that the financial history of Maine is paralleled by the history of nearly all the states. But it is with the State of Maine that we are concerned at the moment.

As far back as 1784 Maine and Massachusetts were united as an integral part of the Union. The question of separation began to be agitated, and it is interesting to observe that differences in the imposition of taxes were the cause of this agitation. But it was not until 1820 that separation was finally effected and Maine became an independent State.

Nearly one-half of the land of the new State was public land. We are reminded by Professor Jewett that speculation in Maine timber lands in 1833 rose to "fantastic heights." The revenue from the sale of public lands as recorded by the Land Office exceeded in that year the sum of all the taxes.

For a time Maine lived like a drunken sailor on the sale of its public lands. So large was the revenue from this source that in 1835 the State tax on estates was abandoned, which served further to intensify the land speculation mania. It doesn't seem to have occurred to anyone in authority that the real remedy would have been a tax on the rental value of these lands. But they were no wiser in their generation than we. Then came the panic of 1837, the inevitable consequence of the fiscal policy followed by Maine and the rest of the Union. Then Maine started on an experiment in "farm relief" with the usual disastrous results. An Act was passed in 1837 granting a bounty of two dollars on every twenty bushels of wheat. This experiment in "priming the pump" cost the State $153,981.75 in 1839. We must bear in mind that the sum bears little relation to the vastly greater sums we are accustomed to think of in the days of Franklin Roosevelt. But it was large for the time.

When Maine went on its drunken spree on the revenue derived from the sale of its public lands it was obvious enough that the time would come when there would no longer be any public lands to sell. By 1856 most of the best timber lands had been sold and receipts from this source had become negligible.

Then began the hunt for "new sources of revenue." How familiar sound the words! The State obstinately refused to avail itself of direct taxation. For nearly a century the stupid politicians of Maine had set their faces like flints against any form of direct taxation. There were constantly recurring deficits and constant increases in taxation to meet these deficits.

A Permanent School Fund had been established in 1828 and thus Maine was able to add substantially to the revenue for education. If some more reasonable modification of this plan, which at least recognized the State's right to its public lands, had been adopted Maine would never have needed to raise a penny from direct or indirect taxes. But Maine like most of the states was only piecemeal wise.

With what wisdom the finances of the State were conducted may be gathered from the fact that the State debt in 1913 was $269,000 and in 1936 was nearly thirty million!

All the evils under which the State suffered can be traced from the time when it began to squander its natural resources. Professor Jewett tells us that in the sales of half the public land of the State a relatively small proportion passed to actual settlers. Most of it was sold in large tracts. Massachusetts had passed a law providing that no more of its public lands should be sold but that permits to cut timber should be issued and that the land be retained in perpetuity another partial recognition of a better social policy.

In the meantime recurring periods of land speculation went on at an appalling rate. Professor Jewett quotes Hugh McCulloch, Secretary of the Treasury in the administration of Lincoln, Johnson and Arthur, as follows:

"The wildest speculation that has ever prevailed in any part of the United States was in the timber lands of Maine. In 1832 it became known to people in Massachusetts that a great deal of money was being made by a few investors in Maine timber lands. ...The lands were offered by the State at very low prices and those who bought early and judiciously did make what were then considered large fortunes by their investments. Lands bought one day were sold the next day at a large advance. The lands were bought and sold over and over again, until lands which had been bought for a few cents an acre were sold for half as many dollars. As is always the case where speculation is rampant and inexperienced men become speculators, dishonesty was in the ascendant."

By the end of 1853 the most valuable lands had been sold and with the grant of 700,000 acres to the European and North American Railroad in 1868 practically all of Maine's timber land was gone.

So closes one more tragic state history of which our annals are full. And again we revert to the comment of the Swedish statesman quoted at the beginning of this review and thank, too, Professor Jewett for his confirmation of the truth of that comment.