William S. Gordy, Jr. (1873-1950)
MSA SC 3520-1577
Biography:
By Karen Dunaway, Research Archivist at the Maryland State Archives, and Nasim Moalem, Public History student at UMCP, spring 2001, and summer intern at the Maryland State Archives, summer 2001.
Born in Salisbury, Maryland, Wicomico County, December
21, 1873. Son of William Sidney Gordy (d. March 4, 1914) and Virginia
Dashiell (Brewington)
Gordy (d. May, 1908). Attended public schools
in Salisbury. Episcopalian. Married Clara White on November
14, 1901. Died in Salisbury, December 5,
1950 after a lengthy illness. Buried in Parsons
Cemetery, Salisbury.
A self-described practical business man, William S. Gordy Junior went from a relative obscurity in state political circles to win the comptroller's seat vacated by E. Brooke Lee in 1921. Gordy then went on to serve a then-record 18 years as the state's first professional comptroller.
Gordy began his career shortly after graduation with the Baltimore, Chesapeake and Atlantic Railway Company's freight office. He later became a claim clerk for the railroad in Baltimore. Gordy also worked for the Western Union Telegraph Company in Salisbury and the New York, Philadelphia and Norfolk Railroad. In 1895, Gordy began a very long and prestigious banking career with the Salisbury National Bank serving as an assistant cashier (1895-1907), cashier (1907-1913), and bank president (1933-1950). Gordy went on to serve as the president of the Associated Banks of Somerset, Worcester and Wicomico Counties (1916-1950) and Maryland Bankers' Association (1918-1950). Gordy also served as the president of the Gordy Insurance Company, the company founded by Gordy, Sr. During World War I, Gordy ran Liberty loan and Red Cross drives. In 1928, 1932, and 1936, Comptroller Gordy was a delegate to the Democratic national conventions. Two years later, Gordy made an unsuccessful bid for the Democratic party nomination for governor in 1938. By the time of his death, Gordy had also served as treasurer of the Salisbury Home for the Aged; president of the John B. Parsons Home for the Aged and president and treasurer of Peninsula General Hospital, where he oversaw its modernization and increase in size. He was a member of the Masons and the Elks and was a trustee of St. Peter's Protestant Episcopal Church.1
Gordy's banking career and reputation as a by-the-book accounting professional helped him to get and secure his role as comptroller. Known for being practical and business-minded , he instituted a double-entry book-keeping system during his first year in office (1922) that reduced errors and allowed the state to collect taxes more efficiently.2 Taking a pro-active approach to increasing revenue to the state, he recommended creating the position of State License Inspector in 1924 to ensure that businesses were licensed properly. The new position helped bring in an additional $40,000.3 In 1924, Gordy recommended that the comptroller and governor supervise expenditures made by all state agencies.4 He believed that this would increase the economic efficiency of the state; the legislature eventually granted this power to the Board of Public Works (comprised of the governor, comptroller, and treasurer) in the 1933 budget bill.5 By 1932, Gordy announced that a new and more efficient system of settling accounts, in which all state accounts made payments directly to the Treasury, was completed. In the mid-1930s, when the state was teetering on the brink of bankruptcy, Gordy recommended that the state create an emergency fund, which the General Assembly accomplished after securing a loan in anticipation of taxes to be collected for the year. By 1936, the state had returned to firmer financial footing and anticipated a surplus of $1.2 million.6 Gordy's penchant for organization and efficiency further aided the comptroller's office when, in 1937, the first state income tax was enacted. Set at one-half of one-percent, the new law was intended to provide further revenue for relief programs. The returns were due on March 15th of the following year.7 Evidence suggests that Gordy's office was able to handle the additional workload with relative ease.8
Newspaper coverage of Gordy as comptroller was largely positive. The Baltimore News-American called Gordy a "political wonder," and wrote that as a "new politician…the old-timers are sitting up and taking notice."9 He was said to have been the kind of politician that delivered on campaign promises and kept his word. Similarly, Baltimore Sun writer Gerald W. Johnson called Gordy one of the most trustworthy politicians. He called Gordy, "A better bookkeeper than [Baltimore Mayor Howard W.] Jackson...[Gordy] would look after the state’s money with the minutest care, and no cracksman, criminal, or political, would get away with a cent of it."10
The Great Depression hit the country with full impact, but its effects were slightly delayed in Maryland. The state’s broad agricultural base and the continued reassurances of Baltimore business leaders that the “’basic causes of the depression have completely disappeared’” helped to stave off the catastrophic effects of the Depression for a short time. By 1932, however, the Baltimore Association of Commerce agreed that the country and the state were in about the same place.11 While business leaders avoided admitting that Maryland was susceptible and had, in fact, fallen into a Depression, the unemployed sought help early on from one of the only avenues available to them--private charities. Yet, by 1930, those private organizations were inundated by the city’s unemployed and were calling for state help.
Baltimore city's 19.2 percent unemployment rate was having its effect on the rest of the state. Maryland’s unemployment worsened, coal was depressed and several counties nearly depleted all of their relief funds.12 As private relief efforts proved inadequate, Governor Albert C. Ritchie continued to urge business leaders to demonstrate statesmanship and promote self-help for the community. Despite calls for an increase in state aid, Ritchie refused to expand public works and use state funds until all other options had been explored. Ritchie’s philosophy on government was firmly based in the belief that the government’s role was to retrench and limit taxation.
Still, despite his beliefs, Ritchie arranged for state aid by short-term borrowing. In the Spring of 1931, he set aside certain race-track proceeds for the unemployed. He told state authorities to proceed with all planned public works projects and in 1933,13 the Governor asked that state employees contribute 10 percent of their salaries to aid relief funds. He also increased Baltimore’s gas tax and motor vehicle funds, and set a bond issue to meet Baltimore’s 3 million dollars in relief need.14
Despite these efforts and initiatives, Ritchie’s ideas and various community and religious relief efforts couldn't continue to bear the onslaught of the needy. Realizing that the state was, in fact, in desperate trouble, Ritchie fought for Maryland’s “fair share” among New Deal programs once FDR's New Deal Administration took office. Ritchie’s self-help motto would have to take a back burner to federal aid.
While federal aid fell into every area, it would not do so without a price tag. In 1934, the Federal government required the state to put up half the costs of the state's relief activities, roughly equaling 9 million dollars.15 Ritchie and state legislators were finally forced to come up with sources of revenue. Despite recommendations to institute a sales tax16, income tax17 or lottery18, relief rolls were cut instead and bonds were issued to fund the rest of the 9 million. By this time, Maryland was ranked last in spending amongst all the states for PWA matching grants.19
The state's penny-pinching in no way helped its finances. By 1935, Maryland teetered on the brink of bankruptcy. The economic crisis had deeply cut the state’s revenue sources and it was dangerously close to defaulting on a 3.5 million dollar debt payment. To avoid a catastrophe, the General Assembly was forced to borrow 1 million dollars in anticipation of tax revenues for that year.20
All of Governor Ritchie's efforts to avoid implementing further sources of revenue at the expense of relief programs proved to be his final political undoing. Governor Nice lost his fifth re-election campaign to Republican Pro-New Deal candidate Harry W. Nice in 1934.
Under Nice's tenure the New Deal received a less hesitant welcome from Maryland. The problem of funding, however, still loomed large on the state's collective conscience. In 1935, the state needed to raise an additional 5 million dollars to match a federal grant for relief to the poor. The General Assembly and the Governor set about finding a way to increase revenue to the state. House Speaker Emanuel Gorfine, a Democrat from Baltimore, introduced a bill calling for the first retail sales tax in the history of the state. The bill passed the House by a slim margin but was eventually killed in the Senate. Gorfine then changed the retail sales tax bill to a gross sales tax. This new tax bill would allow merchants to either absorb the tax or pass it on to the consumer, but the ultimate accountability of the tax would remain with the merchant. The gross receipts tax bill also had the support of Senate President Lansdale G. Sasscer of Prince George's County, practically ensuring passage of it by the Senate. The law would be effective for one year and renewable yearly.21
Although Nice advocated a general sales tax, he was never supportive of a gross receipts tax. In fact, Gorfine and Sasscer never consulted the Governor about the gross receipts tax. Letters and telegrams poured into the Governor's office begging him to veto the bill, calling it an unfair tax.22 Although some were in favor of the gross receipts tax23, the overwhelmingly majority of the letters preferred the proposed 2 percent sales tax to the 1 percent gross receipts tax. Nice, despite having serious reservations24 as to the legality of the bill25, eventually did sign it into law.26 He received much criticism from the public and was forced to defend his actions claiming the bill was never his idea, although he was blamed for it.27
The job of administration of the gross receipts tax law fell squarely on the shoulders of Comptroller William S. Gordy. Gordy first set about explaining the law28 and deadline requirements29 for merchants to file returns.30 While early estimates anticipated that the gross receipts tax would bring in roughly 4 million dollars31, the tax actually generated close to 5 million in badly needed funds for the state.32
The controversial gross receipts tax law was not renewed in 1936. Maryland leaders would now have to find another method of generating revenue for the state in a time of economic disaster.
In 1937, state lawmakers were once again dealing with financial problems. Since the gross receipts tax was not re-enacted, the General Assembly was charged with finding sources of revenue sufficient to finance the state's social security and relief needs for the next two years. Amongst the Governor's chief recommendations was a continuation of the controversial gross receipts tax and a new tax on bookmaking. Evidence from the Governor's files suggests that Nice's initial support of a gambling tax was as a result of suggestions he received from the public on different ideas for state revenue. While the legislature rejected the Governor's gross tax recommendation, it did adopt a bill that incorporated the tax on bookmaking. However, the Governor pulled his support of the bill precisely for the item he had initially endorsed--a tax on gambling. The Legislature passed a tax on bookmaking during the regular session, but after a backlash from religious leaders and anti-gambling contingent, Nice vetoed the bill.
The Governor then called a special session of the General Assembly, the fifth in his two years in office, in order to craft a new relief bill.33 While the Governor once again endorsed a gross receipts tax, this time modified to 3/4 of 1 percent, even he realized the proposal was doomed to fail. The Assembly finally agreed to a bill that instituted the state's first income tax. Newspaper accounts report that the whole new relief bill passed in the last few hours of the special session and that the income tax portion "emerged as a serious contender" only in the last few days. The income tax was discarded at one time in favor of an additional 2 cent tax on real estate. Then one day before the closing of the session, the real estate tax was scrapped for the income tax. The tax was seen as a huge loss for majority floor leader Senator J. Allan Coad, majority leader since 1935, who had been bitterly opposed to the income tax. When the Senate approved the bill 14-13, its passage was seen as "toppling" Coad. While the new relief bill proved to be controversial like its predecessor, Governor Nice signed it into law despite his "personal objections" to it. The bill included an amendment legalizing pinball machines, which Nice believed was a form of gambling.34
The tax was expected to bring in one-third of the estimated 5 million dollars needed in relief funds. Yet, the comptroller's office reportedly thought that estimate of 1.5 million was too liberal.35 In actuality, the comptroller's annual report shows that the income tax revenue for the 1938 budget year equaled roughly 1 million dollars.36
The General Assembly during its regular session additionally addressed the issue of income taxation by proposing a constitutional amendment calling for a progressive tax. The issue was to be put on the ballots in the November 1938 elections. Maryland voters rejected the proposed amendment by nearly 20,000 votes. Income taxation for the year would be based solely on a flat rate of 1/2 of 1 percent.37
Return to William S. Gordy, Jr.'s Introductory Page
|
Tell Us What You Think About the Maryland State Archives Website!
|