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Gasoline Taxes and the Great Depression: A Comparative History

Published online by Cambridge University Press:  02 September 2014

Carl-Henry Geschwind
Carl-Henry Geschwind*
Affiliation:
Washington, D.C.
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Journal of Policy History , Volume 26 , Issue 4 , October 2014, pp. 595 - 624
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Copyright © Donald Critchlow and Cambridge University Press 2014 

It is well known among transportation policy analysts that gasoline is a lot more expensive in Europe than in the United States, and that this difference arises because of much higher gasoline tax rates in Europe. A recent Congressional Research Service study, for example, points out that in 2008 before-tax gasoline prices were quite similar in Germany, France, the United Kingdom, and the United States, ranging from $2.84 to $2.96 per gallon. With taxes added in, however, the prices averaged $7.53 per gallon in both France and the UK and $7.72 in Germany, while they were only $3.24 per gallon in the United States.Footnote 1 While the enormous gap in gasoline tax rates has widened in recent decades, it is of long historical standing.Footnote 2 Every year since 1930, for example, gasoline tax rates in both Germany and Great Britain have been far above the combined federal and state rates in even the most highly taxed American state. Even in New Zealand, a quite rural country with a lower population density than the United States and the world’s second-highest rate of motor vehicle ownership in the 1930s, gasoline tax rates have been at least 50 percent higher than in any American state ever since 1930.Footnote 3

Because the demand for motor fuels is at least somewhat elastic with respect to price, especially for price signals that endure for several years and thus affect decisions on car purchases and housing location, the price differential caused by this difference in tax rates has had an impact on European transportation patterns.Footnote 4 Germans, for example, are much more likely than Americans to use mass transit, even when controlling for such variables as income, population density, and degree of urbanization; this difference can be attributed in large part to the persistently higher price of gasoline in Germany.Footnote 5 Thus, motor fuel taxation is a potentially useful tool for managing gasoline consumption to deal with such problems as global warming and peak oil.Footnote 6 Given this utility, the question arises of what forces have kept rates so much lower here than even in other sparsely settled countries for the past eight decades.

A comprehensive historical explanation for this persistent difference in gasoline tax rates cannot yet be offered, mostly because the historical evidence necessary for a cross-country comparison spanning the twentieth century still remains to be documented.Footnote 7 In this article, I want to contribute toward this larger project by exploring the political dynamics of the gasoline tax during the Great Depression. These four years, from 1930 to 1933, were a key turning point in the international history of the gasoline tax. At the end of 1929, motor fuel imposts in Germany and New Zealand were essentially equal to that in the highest-taxed state, Florida, at $0.66 to $0.68 per U.S. gallon in 2005 U.S. dollars, while the British rate was only slightly higher at $0.84 per U.S. gallon (within the range of exchange-rate uncertainties). But by the end of 1933, in nominal terms the rate had doubled in Great Britain, more than doubled in New Zealand, and nearly tripled in Germany, while it had increased only 42 percent in Florida and 52 percent on average in the United States as a whole.Footnote 8 At the beginning of 1934, the gasoline tax amounted to $1.96 per U.S. gallon in 2005 U.S. dollars in Great Britain, $2.24 in New Zealand, and $2.54 in Germany. Meanwhile, in the United States the combined state and federal tax ranged from $0.45 in the lowest-taxed states to $1.21 in the highest-taxed states, with the average rate being $0.70.Footnote 9 In other words, the rates overseas during these four years moved far above the range encountered in the United States, creating a disparity that has persisted ever since.

Unfortunately, the existing historical literature on gasoline taxes offers little guidance for analyzing this particular period. The historiography is best developed for the case of the United States, but here historians have focused on the periods flanking the Great Depression, describing in detail the emergence of the state gasoline tax as a tool for road finance in the 1920s and then the fight against diversion of gasoline tax revenues for nonhighway uses in the mid- and late 1930s. This story is certainly a reasonable interpretation of the internal development of the gasoline tax as reflected in American primary sources. But because American historians have tended not to ask comparative questions, they have missed that there was an absence of large tax increases in America in the early 1930s.Footnote 10 Meanwhile, historians of the German automobile and oil industries have noted the sharp increase in gasoline duties in their country.Footnote 11 But the standard history of British automobile taxation glosses very quickly over the steep tax increases of the early 1930s, while discussion of the New Zealand petrol tax increases is limited to scattered references in a general history of New Zealand taxation.Footnote 12

In this article, I will explore why gasoline tax rates diverged so dramatically during the Great Depression in these four countries, which were chosen because they represent the two largest European countries whose languages I command and the two countries with the highest degree of motorization at the time.Footnote 13 I will first set the stage by discussing the degree of motorization, structure of gasoline supply, and nature of the gasoline tax system in each country in 1929. I will then trace the pressures leading to steep gasoline tax increases in Germany, Great Britain, and New Zealand during the Depression years. I will conclude by using insights gathered from these three cases to interrogate what happened (or, more precisely, what did not happen) in the United States.

Setting the Stage: Motorization, Gasoline Supply, and Gasoline Taxation in 1929

In 1929, Americans had the highest degree of motorization in the world. That year, there were 220 motor vehicles (including motor cycles) per 1,000 population in the United States, while there were only 19 in Germany, 49 in Great Britain, and 143 in New Zealand.Footnote 14 This difference can be explained as largely due to differing income levels. The per capita gross domestic product (GDP) of the United States, at purchasing power parity, was around 50 percent higher than the British one, which in turn was slightly higher than that of New Zealand and roughly 50 percent higher than the German one.Footnote 15 But per capita GDP is not necessarily the best indicator of ability to consume; contemporary car manufacturers were far more interested in the number of households above a given income level, as this indicated the potential size of the market for their product.Footnote 16 Income tax statistics for 1929 reveal that about 3 percent of German tax units (i.e., married couples and single adults) earned at least the equivalent of $15,000 in 2005 U.S. dollars, while about 10 percent of British and New Zealand tax units and somewhat more than 30 percent of American ones did so.Footnote 17 A simple statistical analysis shows that this difference in the number of high-earning households explains about 80 percent of the variation in levels of motorization; only about 20 percent of the variation remains to be explained through such factors as differences in geography or culture.Footnote 18

In 1929, Americans not only had greater wealth and more cars, but they also had more ready access to motor fuels. That year, at a time when it had 71 percent of the world’s registered motor vehicles, the United States produced 68 percent of the world’s crude petroleum and operated 77 percent of the world’s refinery capacity.Footnote 19 The country was self-sufficient in oil; its net exports of refinery products exceeded its net imports of crude petroleum and had done so for every year since at least the 1870s, with the exception of the period from 1920 to 1923.Footnote 20 Flush production resulted in comparatively low consumer prices; at the end of 1929, the retail price for gasoline (excluding taxes) in the United States averaged about $2.00 per gallon in 2005 U.S. dollars.Footnote 21 By contrast, none of the other three countries had any significant petroleum production or refinery capacity in the late 1920s. Thus, these countries relied primarily on imports of refined gasoline to meet their motor fuel needs; as a result of the high transportation costs as well as cartelization among the world’s major oil companies, the retail price of gasoline (excluding taxes) at the end of 1929 in London, Berlin, and Auckland varied from $2.90 to $3.10 per U.S. gallon in 2005 U.S. dollars.Footnote 22

Given the relative scarcity of gasoline outside the United States, motorists in coal-rich countries turned to coal-derived fuels. In Great Britain, benzol, a gaseous by-product of the conversion of coal to coke, supplied about 3 percent of motor fuel in the late 1920s, while in Germany the market share of benzol reached as high as 30 percent—in fact, demand for this particular fuel, which had superior antiknocking characteristics, was so strong that Germany had to import about a third of its supply.Footnote 23 Meanwhile, government and industrial chemists were also pursuing methods for manufacturing synthetic gasoline from the hydrogenation of coal. In Germany, a plant generating enough synthetic gasoline to meet about 5 percent of German motor fuel demand would open in 1930, while in Britain construction on a similar-sized plant would begin three years later.Footnote 24

The different degrees of gasoline self-sufficiency also had an impact on motor fuel taxes. In the United States, the gasoline tax was imposed by the states on retailers or wholesalers, thus affecting both domestic and imported gasoline. Its proceeds were generally earmarked for highway funding, although a few southern states diverted a portion to public schools; as a result, most states also granted exemptions or rebates for nonhighway uses of gasoline (for example, by tractors or in industrial processes). There was a definite sectional gradient in the rate of taxation, with states in the impoverished South charging 4 to 6 cents per gallon in 1929, while in the richer industrial states of the Northeast and Midwest (as well as California), where state revenues were generally more buoyant and where urban motorists were better organized to defeat tax increases, rates ranged from 2 to 4 cents per gallon.Footnote 25 In New Zealand, the petrol duty acted in the same way as an American state gasoline tax. Like the American tax, on which it had been explicitly modeled, it was earmarked for highway funding and provided exemptions for nonhighway uses.Footnote 26 In both Great Britain and Germany, the tax was a duty only on imported petroleum products, thereby providing a degree of protection to domestic coal-derived fuels as well as the tiny domestic oil industries. Because imported gasoline, due to its large market share and low cost relative to domestic products, set the price for motor fuels, the import duty impacted all motorists in both countries and was generally understood as a petrol tax on motorists. But unlike an American-style gasoline tax, it was not earmarked for highways, which instead were funded with motor license fees that were significantly higher than in the United States or New Zealand.Footnote 27

Confronting the Depression: Budget Crises, Protective Tariffs, and the Gasoline Tax

The Great Depression produced fiscal crises in most developed countries, as governments were pinched from two sides: declining economic activity meant that receipts from taxes and duties based on income or consumption declined, while the growing number of unemployed meant that expenditures for public relief increased. In this pre-Keynesian era, finance ministers everywhere responded to the resulting budget deficits by seeking to increase a wide range of taxes.Footnote 28 Gasoline taxes were included among the imposts slated for increase, especially in countries that already had a large number of drivers. But even in the less well-motorized countries examined here, finance ministers turned to petrol duties because of pressure from domestic industries threatened by rapidly falling international oil prices.

Germany

In February 1930, Paul Moldenhauer, Germany’s new finance minister, projected a budget deficit of 700 million RM for the fiscal year due to begin that April (roughly 0.8 percent of GDP). Borrowing to cover this deficit was no longer an option, as both foreign and domestic lenders were increasingly unwilling to provide any further credit to the overextended government. Like the other industrialists who dominated his right-of-center German People’s Party, Moldenhauer refused to consider increasing direct taxes on income, property, or inheritances. Instead, in late February he transmitted a proposal to the cabinet that called for increased taxes on the consumption of such items as beer, coffee, tea, and mineral water. Among his suggestions was one for raising the import duty on mineral oils from 6 RM to 10 RM per 100 kg (an increase of about $0.46 per U.S. gallon in 2005 U.S. dollars) and extending the duty to the import of benzol—a move that had been requested by domestic benzol producers, which is to say, the politically powerful coal industry.Footnote 29

The increase in the mineral oil duty encountered little opposition among members of the governing coalition; the beer tax increase, for example, which was detested by the Bavarian People’s Party, proved to be far more controversial.Footnote 30 Motorists of course vigorously protested the gasoline tax hike, but their objections were ignored both in the finance ministry and in parliamentary debate.Footnote 31 The most cutting attack in the Reichstag instead came from a couple of Communist Party members, who pointed out that Moldenhauer was a member of the supervisory board of I. G. Farben, the giant chemical combine that operated Germany’s first synthetic gasoline plant and thus would benefit greatly from increased duties imposed on its competitors.Footnote 32 In response to these charges, Moldenhauer introduced complementary legislation that would impose an excise tax of 4.80 RM per 100 kg on domestically produced oils—a level that, due to the way weights were calculated, was equivalent to the 4.00 RM per 100 kg increase in the duty on imported products. But in order to attract right-wing protectionists, whose votes he needed, Moldenhauer subsequently reduced the excise tax to 3.80 RM per 100kg, thereby ensuring that domestic gasoline and benzol producers would in fact have increased tariff protection against importers.Footnote 33 This modified tax package finally passed the Reichstag on April 14.Footnote 34

By June 1930, Moldenhauer had resigned as finance minister, after only six months in the position. Relief from Germany’s budget crisis proved to be just as short-lived. Two more tax increases became necessary, affecting income taxes in July and the tobacco tax in December 1930. As the government of Chancellor Heinrich Brüning no longer commanded a parliamentary majority, these were imposed as presidential emergency decrees.Footnote 35 By early May 1931, it was becoming apparent that the new fiscal year would once again show a deficit, estimated at 782 million RM (about 1.1 percent of GDP). At just this time, I. G. Farben approached the government seeking an increase in the mineral oil duty. Flush production in the newly discovered East Texas oil field, as well as a flood of cheap Soviet and Romanian gasoline being dumped onto the European market, had triggered a price war in Germany, reducing the retail gasoline price in Berlin by about $1.10 per U.S. gallon in 2005 U.S. dollars during the fall and winter of 1930/31 and thereby rendering the company’s manufacture of synthetic gasoline uneconomic. The low-cost imported gasoline was also threatening domestic oil exploration companies, which just then were making some promising strikes in northern Germany but whose costs were still high because they lacked economies of scale or technological sophistication. Responding to these concerns, Hermann Dietrich, the new finance minister, in his program of tax changes included a proposal to increase the import duty on mineral oil from 10 RM to 17 RM per 100 kg (an increase of $0.90 per U.S. gallon in 2005 U.S. dollars), noting that it would not only raise 75 million RM in the current fiscal year, but also “1. support German oil finds and 2. support German synthetic gasoline.”Footnote 36 While the cabinet substantially modified other parts of Dietrich’s revenue proposals, particularly a surtax on incomes, it approved the increase in mineral oil duty without discussion.Footnote 37 After the duty increase became law through presidential emergency decree on June 5, 1931, leading to an immediate rise in all motor fuel prices, motorists once again were left spluttering in impotent indignation.Footnote 38

The Brüning government still was not finished with tax increases; in December 1931, it would raise the general sales tax to 2 percent in yet another attempt to close the budget deficit.Footnote 39 But the import duty on mineral oil was not increased again. Instead, when a renewed price war once again threatened domestic gasoline producers in the summer of 1932, the government responded by temporarily lowering the excise tax on domestic gasoline. And in late 1933, the new Nazi government would conclude a contract with I. G. Farben giving the company a guaranteed minimum price for its gasoline output.Footnote 40 For motorists, however, the damage had already been done, as the convergence of the government’s urgent revenue needs with the desire of high-cost domestic producers for tariff protection had already led to a near-tripling of the gasoline import duty.

Great Britain

In the spring of 1930, Philip Snowden, Great Britain’s new Chancellor of the Exchequer, also faced a budget deficit for the coming fiscal year, amounting to nearly £32 million (about 0.7 percent of GDP). In the run-up to his annual budget speech on April 14, newspapers freely speculated that he would increase the petrol duty by 2 pence per Imperial gallon. But Snowden, a committed Free Trader who detested protective tariffs, refused to follow these “unanimous expectations of Press forecasts”; instead, true to his Labour Party principles, he relied solely on raising income taxes on the wealthy.Footnote 41

For his next budget, in April 1931, Snowden once again had to cover a £37.5 million deficit (roughly 0.9 percent of GDP). This time around, bureaucrats at the Treasury convinced him that a further increase in income taxes would be counterproductive; thus, he now turned to the petrol tax, increasing the duty from 4 pence to 6 pence per Imperial gallon (an increase of $0.47 per U.S. gallon in 2005 U.S. dollars). He chose this tax, rather than those on beer, tobacco, or sugar, because he could “think of no Customs or Excise Duty, an increase of which would cause less hardship”; after all, the major oil companies had just dropped their petrol prices by 2 pence the previous month. Because of that price drop, motorists, automobile manufacturers, and commercial vehicle owners, who denounced the tax increase as unfair and unjust, found little sympathy among the general public and virtually no support in Parliament. Meanwhile, Conservative ideologues of protectionism and even some of Snowden’s Labour Party colleagues welcomed the protection that it provided to domestic producers of benzol and Scottish shale oil. In fact, during the parliamentary debates, Snowden himself seemed to be the speaker most uncomfortable with increasing the petrol duty.Footnote 42

Britain’s financial position worsened dramatically in the summer of 1931. The report of a parliamentary committee, published near the end of July, revealed a prospective budget deficit of £120 million for the following year. Snowden in early August was even more pessimistic, putting the deficit at £170 million for the coming year (around 4 percent of GDP) and £47 million for the current one. An exodus of foreign investors led to a run on the nation’s gold and currency reserves. This crisis forced the government to act quickly to balance the budget if it wanted to avoid a devaluation of the pound. Debates over the required budget cuts tore apart the cabinet, leading the Labour government to fall in late August. Snowden, however, remained as Chancellor of the Exchequer in the new cross-party National government and on September 10 finally unveiled his supplementary budget, which included another 2 pence per Imperial gallon increase in the petrol duty among a slew of other tax increases. The response of motorists this time was muted, with the Automobile Association noting that “[a]t this time of national crisis . . . all concerned must take a long view of the situation.” Probably aiding their attitude was the fact that, as a result of the international gasoline price war, petrol prices had once again been reduced by 2 pence over the summer. Comment in the House of Commons was also generally positive, with both Labour and Conservative members from Scotland noting the protective effect of the increased duty on the tiny and moribund Scottish shale oil industry.Footnote 43

Speedy adoption of Snowden’s budget did not prevent Great Britain from going off the gold standard. This, however, proved to be a blessing; not only did it end the country’s deflationary spiral, but by allowing the government to refinance its heavy debt load at lower interest rates, it also significantly relieved the budget and ended the need for harsh tax increases.Footnote 44 The early end to the economic contraction meant that British motorists escaped the Depression years with only a doubling of their petrol tax rather than a near-tripling, as suffered by their German colleagues.

New Zealand

In both Germany and Great Britain, increases in the gasoline duty received substantial support in government and parliamentary circles because of the protection they afforded to domestic motor fuel producers. This dynamic did not obtain in New Zealand, a country that had no domestic interests to be protected against gasoline imports.Footnote 45 Nevertheless, a continuing series of budget crises drove the petrol tax rate here as high as in Europe. These budget-balancing tax increases passed through New Zealand’s parliament despite the facts that the petrol tax until 1930 had been earmarked solely for road purposes (with its proceeds actually segregated in a separate Main Highways Account) and that motorists were well represented in legislative circles.

George Forbes, a member of the middle-of-the-road United Party, who led a minority government as both Prime Minister and Finance Minister, like his European colleagues in the summer of 1930 faced a severe budget deficit, which in his case stood at £3.1 million (about 2 percent of GDP). To close this gap, Forbes in late July introduced a surcharge on all customs duties, in the case of petrol amounting to 5 percent. He also proposed raising the petrol tax from 4 pence to 7 pence per Imperial gallon (an increase of about $0.51 per U.S. gallon in 2005 U.S. dollars). While the proceeds of this increase would be earmarked for the highways fund, it would relieve the government from contributing any general revenue for road building, as it had done in years past; it would also allow an acceleration of construction in the rural backcountry.Footnote 46 Motorists across the country condemned the hike as a “most inequitable tax.” Unlike in Europe, their view was championed in the legislature, as the president of the South Island Motor Union happened to be a prominent member of Parliament for the opposition Reform Party.Footnote 47 Agrarians and those representing bus-dependent suburban districts also attacked the increase. In the end, Forbes abandoned his plan to accelerate road construction, but held fast to a 2-pence increase to relieve the general fund; a reluctant Labour Party, which did not want to see the government fall, finally joined the United Party in adopting the increase.Footnote 48

A year later, Forbes faced another deficit of £6.8 million (nearly 5 percent of GDP). This time, he proposed a hefty income surtax as well as increased duties on sugar, tea, tobacco, and luxury goods, but stayed away from the petrol tax, as the previous year’s debate had convinced him that he could use this tax only for highways, which were now fully funded.Footnote 49 With the financial situation continuing to worsen, Forbes in September 1931 convinced the conservative Reform Party to join in a National government.Footnote 50 William Downie Stewart, the Reform Party fiscal expert who now took over as finance minister, soon concluded that the current year’s deficit would be even greater by another £1.6 million. Downie Stewart then entered private negotiations with the motor clubs, asking for a 3-pence increase in the petrol tax and finally winning grudging acquiescence for a hike of 2 pence per Imperial gallon (now $0.36 per U.S. gallon in 2005 U.S. dollars), with the proceeds going straight to the general fund. With the motorists not protesting the tax in public, the increase passed parliament relatively easily.Footnote 51 Downie Stewart repeated this strategy in the spring of 1932, when, facing a deficit of £8.3 million (close to 7 percent of GDP) for the upcoming fiscal year, he used the threat of another 2-pence increase to win approval for a diversion of £500,000 from the highway fund for nonroad purposes (roughly equivalent to 2 out of the 6 pence per gallon that had been earmarked for roads).Footnote 52

New Zealand’s budget crisis reached its pinnacle in early 1933, as the projected deficit for fiscal year 1933/34 reached £9.5 million (more than 8 percent of GDP). Gordon Coates, the former prime minister who had succeeded Downie Stewart as finance minister a month earlier, in February proposed yet another round of bruising tax increases, including a 5 percent tax on all retail sales as well as another hike in the petrol tax of 3 pence (now equal to $0.64 per U.S. gallon in 2005 U.S. dollars). But motorists had had enough. They felt particularly aggrieved because New Zealand had not benefited from the international gasoline price war. Neither American independents nor the Soviets had taken the initiative to export to small and remote New Zealand, so the pre-tax price of petrol in Auckland now stood at about $4.00 per U.S. gallon in 2005 U.S. dollars, about $2.30 more than in the United States and $1.20 more than in London. Thus, motor clubs raised a protest against the “oppressive” and “staggering” taxation suggested by Coates, arguing that “advantage has been taken of our previous helpful attitude, and the present tax is . . . inequitable.” Under this barrage of attacks, Coates backed off from his original proposal, but by emphasizing the dire budgetary situation he still managed to push through an increase of 2 pence.Footnote 53 As a result of these three successive tax increases, New Zealand motorists during the Great Depression went from paying a tax of 4 pence per Imperial gallon earmarked entirely for road purposes to paying a tax of 10.5 pence per gallon, with only the original 4 pence still being used for road purposes.

Gasoline Tax Increases in the United States During the Great Depression

The steep gasoline tax increases in Germany, Great Britain, and New Zealand during the early 1930s were the result of two distinct sets of pressures: the enormous budget deficits that led finance ministers to force through steep across-the-board tax increases, and the pleas of domestic fuel producers for tariff protection from low-cost imported gasoline. Both of these sets of pressure also were present in the United States, but they did not result in the same levels of gasoline tax increases, for reasons to do both with the structure of the domestic oil market and the comparative meekness of budget-balancing efforts.

The American Gasoline Import Duty of 1932

American oil producers fretted just as much about cheap imported gasoline as did German synthetic gasoline manufacturers and Scottish shale oil miners. In particular, Venezuelan petroleum and gasoline enjoyed a slight cost advantage over domestic products along the Atlantic seaboard, and independent producers in Oklahoma and Texas felt threatened by these imports. In 1930, these independents tried to shut out their competitors by including an oil import duty as part of the Smoot-Hawley tariff. They failed, however, largely due to both ineffective lobbying and internal dissension in the oil industry, as the major oil companies, many of which themselves were involved in Venezuelan production, opposed the duty. By 1932, though, the oil industry presented a far more united front in favor of an import duty. Moreover, congressmen from Oklahoma and Texas were important swing voters for various unrelated measures in the tax-raising bill being discussed in Congress that year. As a result, congressional leaders decided to accommodate the oil-patch interests by including an import duty of 0.5 cents per gallon on crude oil and 2.5 cents per gallon on gasoline ($0.36 per gallon in 2005 U.S. dollars). Congressmen from Maryland, New Jersey, and Massachusetts repeatedly protested that this duty would increase costs for all oil consumers, including motorists, an argument echoed by the Washington Post. But these protests were to no avail, as the import duty survived to become part of the Revenue Act of 1932—at this high tide of protectionism, Congress was just as willing as legislatures overseas to ignore the interests of consumers in order to cater to favored producers.Footnote 54

This import duty was of the exact same nature as the import duties imposed in Great Britain and Germany at the same time. The economic impact, however, was quite different. In Europe, as soon as a duty increase went into effect, the oil companies in unison raised their gasoline prices by the exact amount of the increase, thereby passing it on to consumers. This was not, however, the case in the United States. The Revenue Act of 1932 took effect on June 21, imposing a 1-cent federal gasoline tax (to be discussed below) as well as the 2.5-cent import duty. That day, the oil companies, even along the Atlantic seaboard, raised their gasoline prices by only 1 cent, not 3.5 cents per gallon. Moreover, motorists, in complaining about the additional burden imposed on them by the new revenue measure, mentioned only the 1-cent tax and not the 2.5-cent duty.Footnote 55 In short, the import duty did not become a tax on gasoline in the United States, even though the exact same kind of import duty was widely perceived and attacked as a gasoline tax by motorists in Europe.

What accounts for this difference in impact? It was fundamentally due to the different structure of the gasoline markets in the various countries. In both Germany and Great Britain, domestic producers of gasoline operated at a small scale and were simply incapable of fully satisfying domestic demand; thus, motorists had to rely upon imported gasoline, which therefore set the price on the domestic market. But in the United States the situation was reversed; domestic refiners produced more than enough to satisfy U.S. demand. Moreover, Venezuelan gasoline enjoyed only a slight cost advantage, and only in a restricted area that was favorably located for tanker shipments from Venezuela—in fact, as soon as the duty was imposed, Venezuelan imports to America essentially ceased, and the U.S. Treasury received virtually no revenue from it. But the Venezuelan gasoline now went to Europe instead, displacing American exports there, and the American market continued to be oversupplied. As a result, the price in the American gasoline market continued to be set by domestic overproduction; the pre-tax retail price did not begin to rise until New Deal production restrictions started taking effect in the summer of 1933.Footnote 56

State Gasoline Tax Increases

Just as in Germany, Great Britain, and New Zealand, pressure in the United States to increase the gasoline tax came not only from the lobbying of domestic gasoline producers, but also from the fears of governors and finance ministers about looming budget deficits. In New Zealand, a succession of finance ministers had pushed through bruising increases in the petrol tax against the opposition of motorists, thereby converting what had been a tax earmarked for highway purposes into a general revenue raiser. A similar process did not play out among American states, because here budget-strapped governors faced opposition to gasoline tax increases not only from motorists but also from a powerful domestic oil industry (a factor not present in New Zealand). Throughout the 1920s, the major oil companies had generally taken a hands-off approach with respect to the gasoline tax, concluding that the better roads funded with the tax would actually help to increase gasoline consumption. But frustrated with ever-increasing rates, the American Petroleum Institute in 1929 resolved to take a stand against higher taxes, and in 1931 it even decided to raise a $100,000 fund for a campaign to bring about lower tax rates.Footnote 57

The oil industry’s campaign against higher taxes appears to have been slow off the ground in the more rural sections of the country. In the 1930–31 legislative biennium, gasoline tax rates increased an average of 0.76 cents per gallon in the Old South and 0.67 cents per gallon in the Mountain West, not far off the pace at which they had increased in previous two-year periods. Many of these states used the money to expand their road-building program, but Florida and Tennessee both raised their rates to 7 cents per gallon in order to close general budget deficits. In the remainder of the country, however, tax increases essentially ground to a halt, with the gas tax rising an average of only 0.09 cents per gallon. In both New York and Connecticut, opposition from motorists to one-cent increases was so energetic that the bills died in committee. Plans to issue unemployment relief bonds backed by a one-cent increase in the gasoline tax in California, or to impose a municipal ½-cent tax in Los Angeles for relief purposes, failed to gain any traction in the face of withering protests from automobile clubs, automotive dealers, and petroleum companies. And in North Dakota and Maine, legislatures that increased the gasoline tax saw voters overturn their acts by referendum—not once, but twice in both states.Footnote 58

By 1932, the oil industry’s campaign was in full swing, and as a result, in the 1932–33 biennium gasoline tax rates remained essentially flat throughout the country. In January 1932, New York’s governor Franklin D. Roosevelt proposed to close a $124 million budget deficit by doubling the state’s income tax, stock transfer tax, and gasoline tax (from two to four cents per gallon). The first two of these sailed through the legislature with virtually no opposition, but the gasoline tax increase generated vigorous protests from both oil companies and automobile clubs and barely passed even after the increase had been reduced to one cent.Footnote 59 This single action accounts for essentially all of the nationwide increase of 0.09 cents per gallon in the average tax rate, as motorists and the oil industry were able to defeat efforts to raise the gasoline tax to fund unemployment relief in Pennsylvania, Illinois, Massachusetts, New Jersey, and again in New York (where Roosevelt’s successor failed to raise the tax another cent in early 1933).Footnote 60 Legislators desperate to fund relief efforts or to balance their budgets did succeed in a number of states, including North Carolina, South Dakota, Rhode Island, Oklahoma, and Massachusetts, in diverting some gasoline tax money to the general fund. But the amount diverted across the country ended up representing only about 10 percent of total collections in 1933, equivalent to about 0.36 cents per gallon.Footnote 61

The Federal Gasoline Tax

States were not the only American governments facing severe budget difficulties during the Great Depression. A looming budget deficit also motivated the federal government to enter the field of gasoline taxation, although the tax it eventually imposed was rather puny by comparison with those exacted overseas. The Treasury Department first floated the idea of a 1-cent federal gasoline tax ($0.13 per gallon in 2005 U.S. dollars) in May 1931, once it became apparent that the federal deficit for fiscal year 1931/32 might reach a billion dollars (around 1.3 percent of GDP). Motorists immediately mobilized to oppose such a tax, with twelve member clubs of the American Automobile Association (AAA) submitting formal protests to the Treasury by mid-August. When the Treasury Department finally submitted its proposals for raising $770 million of new taxes in January 1932, it did not include a gasoline tax. But a month later Secretary of the Treasury Ogden L. Mills, in the face of worsening revenue projections, included a 1-cent tax to raise $150 million in what was now an $873 million program of increased taxes.Footnote 62 The American Petroleum Institute mobilized a substantial letter-writing campaign against the gasoline tax, while the AAA organized a national radio broadcast of protests; these efforts proved sufficient to keep the tax out of the bill passed by the House of Representatives as well as the bill submitted by the Senate Finance Committee two months later.Footnote 63

On May 31, though, just before final action in the Senate, Mills informed senators that, due to once again lowered revenue projections, another $285 million in tax increases were needed. Scared into action, the Senate now finally adopted the 1-cent tax as well as several other additions to the tax bill. Senators representing Michigan, center of the automobile industry, and oil-rich Oklahoma frantically tried to block this last-minute increase, but to no avail. The House, weary after having struggled with the tax-increase bill for half a year, then agreed to the Senate’s action so quickly that the American Petroleum Institute barely had enough time to send off a single ineffectual protest.Footnote 64

The gasoline tax proved to be the only one of the excise taxes levied by the Revenue Act of 1932 that lived up to congressional revenue expectations. As a result, even though the tax had originally been set to expire after only one year, it was extended in the spring of 1933 with the endorsement of outgoing Treasury Secretary Mills, incoming President Roosevelt, and congressional leaders from both parties. Sensing the popularity of the one-cent tax among revenue-hungry politicians, the American Petroleum Institute, the AAA, and other opponents of the federal tax offered only token protests against extension.Footnote 65

But the new administration did not stop here. In mid-May 1933, Roosevelt introduced a program calling for $3.3 billion in bonds for public works, to be paid off through $220 million in new annual taxes. In cabinet discussions, Roosevelt’s advisers considered an increase of the federal gasoline tax by another cent as one possibility. In the end, the House of Representatives decided on a program that included a ¾-cent additional tax on gasoline, preferring it to a general sales tax, a tax on amusements, or a tax on breakfast table items such as coffee and tea; the House also stipulated that the tax should be replaced by a liquor tax as soon as Prohibition was repealed. The American Petroleum Institute and various auto clubs kept up a drumbeat of protests, leading the Senate Finance Committee to reduce the tax increase to ½ cent per gallon, but the chairman of the committee prevented any further reduction on the Senate floor by arguing that he could not do without the revenue. At the time the bill passed in June 1933, it was not yet clear how soon Prohibition would be repealed, as none of the bone-dry southern states had yet voted on the question; as it turned out, Prohibition ended on December 5, 1933, so that the federal gasoline tax dropped back to the original rate of one cent per gallon at the beginning of 1934.Footnote 66

As a result of these two bills, the gasoline tax increased at the federal level by 1.5 cents per gallon during the 1932–33 biennium, far more than the 0.09 cent per gallon average at the state level. Nevertheless, these increases, which amount to $0.21 per gallon in 2005 U.S. dollars, were far less than the increases totaling $1.12 per U.S. gallon in 2005 U.S. dollars imposed by the New Zealand government from 1930 to 1933, or the corresponding increases exacted in Great Britain and Germany. It is clear that the relatively small size of the federal tax increases (unlike those at the state level) was not primarily due to opposition from motorists and the oil industry. Once the Treasury Department introduced its proposals, opponents succeeded in whittling down the tax increases by only 25 percent, as congressional leaders convinced of the need for raising more revenue successfully resisted the efforts of representatives from oil- and automobile-producing states to reduce the tax increases even further. Thus, it is at least conceivable that, if the Treasury Department had asked for larger increases backed by a sufficiently forceful appeal to the need for more revenue, a proportionately larger increase would have survived the legislative log-rolling process.

Why, then, did American budget-setters not ask for a gasoline tax increase as large as those pushed by finance ministers overseas? Unfortunately, I have so far not been able to locate internal minutes or memoranda that explicitly document this decision-making process.Footnote 67 However, some reasonable inferences can be drawn simply by examining the magnitude of amounts raised in the various tax-increase programs. Across all four countries, finance ministers sought to close Depression-era budget deficits with broad-based increases in a large variety of taxes, including income taxes, corporate profit taxes, inheritance taxes, beer and tobacco taxes, and sales taxes (either a general sales tax, as in Germany and New Zealand, or a more targeted luxury tax, as in Great Britain and the United States). This spread the pain and balanced the interests of the various aggrieved parties, thereby facilitating log-rolling to produce the votes that would allow the program as a whole to pass. This meant that gasoline tax increases were only a small part of larger revenue-increase programs. When considered as a percentage of the total revenue expected from all increases in taxation from 1930 to 1933, the hikes in the gasoline tax amount to around 12 percent of new federal taxes in the United States, compared to 11 percent of new taxes in New Zealand and 10 percent in Great Britain (comparable figures are not available for Germany).Footnote 68 Thus, if American decision-makers had asked for an 8-cent federal gasoline tax (thereby approximating the petrol tax increase that actually passed the New Zealand legislature), it would have raised roughly 60 percent of the total revenue needed, which would clearly have been perceived as an unbalanced revenue-raising program. It thus appears probable that the U.S. Treasury Department did not ask for a larger gasoline tax increase simply because it did not need one.

But why did the Americans have to raise the gasoline tax only 1.5 cents at the federal level to get the same revenue share for which New Zealanders and the British needed tax hikes four to five times as large? This was in part because finance ministers overseas were more desperate than the U.S. Treasury department. The total tax increases announced by the British government from 1930 to 1933 amounted to about 4 percent of GDP, while the New Zealand ones totaled a staggering 8 percent of GDP; meanwhile, the federal tax increases in the United States were only about 3 percent of GDP.Footnote 69 Just as important, Americans consumed far more gallons of gasoline per capita than persons overseas, and thus the revenue that did need to be raised from the gasoline tax could be spread over many more gallons. New Zealanders, for example, consumed only about a third the number of gallons per person that Americans did.Footnote 70 These two factors—the larger size of the tax-increase program overseas, and the greater amount of taxable gasoline used in the United States—explain why the New Zealand government had to impose a gasoline tax rate increase nearly six times as large as the American one in order to achieve the same revenue goal (i.e., an amount from the gasoline tax approximating one-tenth of the overall tax increase).

Conclusion

As it has been told so far, the story of the American gasoline tax in the early and mid-twentieth century has been strictly a story about road finance—how to raise the money to build new highways, and how to ensure that that money was spent only on highways and not diverted to other uses. According to this story, states developed an earmarked gasoline tax in the 1920s to help satisfy the growing demands for better roads. In the early 1930s, there were some attempts by state governments to divert a portion of the gasoline tax revenue to nonhighway purposes. But motorists and their allies in the oil, automobile, and road-building industries successfully fought back, securing passage of a federal law in 1934 that denied federal highway aid to states that diverted motor taxes and then enshrining the earmarking of gasoline taxes in a number of state constitutions.

While this is how the story of the gasoline tax in fact played out in the United States in the 1930s, it was by no means inherent in its internal logic. The American story could have veered into a significantly different direction during the Great Depression, since there were significant pressures across the developed world to use gasoline taxes for nonroad purposes. In both Germany and Great Britain, motorists were made to pay more for their gasoline in order to protect domestic fuel producers. The same could have happened in the United States because an import duty was also imposed here; that this duty did not affect American motorists is merely the fortuitous result of American oil drillers’ profligacy. The case of New Zealand also shows that, even where a gasoline tax was first set up strictly to fund roads, desperate finance ministers could turn it into a general revenue tax. This did not happen in the United States simply because America’s fiscal crisis during the Great Depression was less severe than New Zealand’s and struck at a time when the United States (because of its greater wealth) was already more motorized. Thus, the fact that the gasoline tax in the United States remained a comparatively light tax to be used principally for road construction is due to a couple of lucky breaks caught by American gasoline users. Motorists in other countries simply were not so lucky.

Footnotes

1. Robert Pirog, The Role of Federal Gasoline Excise Taxes in Public Policy, Congressional Research Service Report R40808, dated 11 September 2009, http://opencrs.com/document/R40808/2009-09-11, accessed 2 December 2010. This study used market-exchange rates rather than purchasing-power parities to convert to dollars; it also included not only gasoline-specific excise taxes but also general sales or value-added taxes imposed on all goods, which are somewhat higher in Europe than the United States and contribute about 10 percent to 15 percent of the difference in price.

2. On the widening of the disparity in gasoline tax rates across the developed world since 1978, see Hammar, Henrik, Lofgren, Asa, and Sterner, Thomas, “Political Economy Obstacles to Fuel Taxation,” Energy Journal 25 (2004): 1–18.

3. U.S. gasoline tax rates are a combination of federal tax rates from Federal Highway Administration, Highway Statistics 2009, table FE101a, http://www.fhwa.dot.gov/policyinformation/statistics/2009/fe101a.cfm, accessed 20 April 2012, and state tax rates from ibid., table MF205, http://www.fhwa.dot.gov/policyinformation/statistics/2009/mf205.cfm, accessed 20 April 2012; idem, Highway Statistics Summary to 1995, table MF205, http://www.fhwa.dot.gov/ohim/summary95/mf205.pdf, accessed 20 April 2012; and idem, Highway Statistics Summary to 1985 (n.p., n.d.), 131–34. Until 1966, the highest-taxed American state was in the South, alternating between Florida, Louisiana, Oklahoma, and Arkansas; since then, the lead has rotated mostly among Washington State, Connecticut, and Rhode Island.

German gasoline tax rates are from Robert Adamek and Friedrich Saake, Die Strassenkosten und ihre Finanzierung (Bielefeld, 1952), 125, and Bundesministerium der Finanzen, “Entwicklung der Energie- (vormals Mineralöl-) und Stromsteuersätze in der Bundesrepublik Deutschland,” May 2009, http://www.bundesfinanzministerium.de/nn_4192/DE/BMF_Startseite/Service/Downloads/Abt_IV/060,templateId=raw,property=publicationFile.pdf, accessed 23 December 2010.

British petrol tax rates have been taken from the relevant Finance Acts and from HM Revenue & Customs, “Hydrocarbon Oils: Historical Duty Rates,” http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageExcise_RatesCodesTools&propertyType=document&id=HMCE_PROD1_023552, accessed 4 December 2012.

New Zealand tax rates have been taken from the relevant taxation acts and from the Ministry of Economic Development, New Zealand Energy Data File 2010, table I.5b, http://www.crownminerals.govt.nz/cms/pdf-library/folder.2007-05-17.4547411750/EDF%202010.pdf, accessed 10 December 2010.

In the British, German, and New Zealand cases, the excise tax has been increased by the value-added tax on the excise tax, but not the value-added tax on the pre-tax price of gasoline, as that is a general sales tax rather than a tax specific to gasoline. In the American case, as sales taxes are generally less significant and most frequently are not charged on gasoline, I have not included them in my calculations.

All gasoline tax rates, as well as other price data mentioned in the text, were converted to 2005 U.S. dollars as follows. First, prices were adjusted to 2005 amounts in local currency using the following consumer price index series: Lawrence H. Officer, “The Annual Consumer Price Index for the United States, 1774–2009,” MeasuringWorth, 2010, http://www.measuringworth.com/uscpi, accessed 10 December 2010; idem, “What Were the UK Earnings and Prices Then?” MeasuringWorth, 2009, http://www.measuringworth.com/ukearncpi, accessed 10 December 2010; Statistisches Bundesamt, “Preisindizes für die Lebenshaltung in Deutschland 1924 bis 2001; Verbraucherpreise seit 1881,” GESIS data series ZA8290, table C.1, http://www.histat.gesis.org, accessed 10 December 2010; idem, “Verbraucherpreise,” http://www.destatis.de/jetspeed/portal/cms/Sites/destatis/Internet/DE/Content/Statistiken/Zeitreihen/WirtschaftAktuell/Basisdaten/Content100/vpi101a.psml, accessed 10 December 2010; Statistics New Zealand, “Consumers Price Index,” Long-Term Data Series, table G.2.1, http://www.stats.govt.nz/browse_for_stats/economic_indicators/NationalAccounts/long-term-data-series/prices.aspx, accessed 18 November 2010; Ministry of Economic Development, New Zealand Energy Data File 2010, table I.6, http://www.crownminerals.govt.nz/cms/pdf-library/folder.2007-05-17.4547411750/EDF%202010.pdf, accessed 10 December 2010. Amounts in 2005 local currency were then converted to 2005 U.S. dollars using the 2005 purchasing-power parity factors of Alan Heston, Robert Summers, and Bettina Aten, Penn World Table Version 6.3, Center for International Comparisons of Production, Income and Prices at the University of Pennsylvania, August 2009, http://pwt.econ.upenn.edu/php_site/pwt63/pwt63_form.php, accessed 18 November 2010.

Comparison of historical purchasing-power parities derived from my approach with independently derived estimates found in the economic history literature suggests that my expression of historical prices in terms of 2005 U.S. dollars is probably accurate to within 10 percent. For other estimates of purchasing-power parities, see Ward, Marianne and Devereux, John, “Measuring British Decline: Direct Versus Long-Span Income Measures,” Journal of Economic History 63 (2003): 835; Williamson, Jeffrey G., “The Evolution of Global Labor Markets Since 1830: Background Evidence and Hypotheses,” Explorations in Economic History 32 (1995): 190; Broadberry, Stephen and Burhop, Carsten, “Real Wages and Labor Productivity in Britain and Germany, 1871–1938: A Unified Approach to the International Comparison of Living Standards,” Journal of Economic History 70 (2010): 404–5; Geoffrey T. F. Brooke, “Three Essays on Economic History” (Ph.D. diss., University of Auckland, 2011), 83. Under the gold standard as in effect in 1929, the official exchange-rate targets were $4.86 per British pound and 20.43 RM per British pound, while the British and New Zealand pound were supposed to be at parity; my data indicate that the purchasing-power parity exchange rates that year were $5.30, 19.36 RM, and NZ£1.28 per British pound.

4. For recent reviews of the elasticity of demand for gasoline, see D. Graham and S. Glaister, “Road Traffic Demand Elasticity Estimates: A Review,” Transport Reviews 24 (2004): 261–74; Phil Goodwin, Joyce Dargay, and Mark Hanly, “Elasticities of Road Traffic and Fuel Consumption with Respect to Price and Income: A Review,” Transport Reviews 24 (2004): 275–92; Martijn Brons, Peter Nijkamp, Eric Pels, and Piet Rietveld, “A Meta-Analysis of the Price Elasticity of Gasoline Demand: A SUR Approach,” Energy Economics 30 (2008): 2105–22.

5. Buehler, Ralph and Pucher, John, “Demand for Public Transport in Germany and the USA: An Analysis of Rider Characteristics,” Transport Reviews 32 (2012): 541–67.

6. Sterner, Thomas, “Fuel Taxes: An Important Instrument for Climate Policy,” Energy Policy 35 (2007): 3194–3202.

7. I am currently preparing a book-length study comparing the politics of the gasoline tax in the United States, Great Britain, Germany, and New Zealand from 1909 to 2009.

8. In real terms the increases were even larger, as deflation amounted to a bit more than 15 percent in Great Britain and around 30 percent in the other three countries over this time period.

9. The lowest-taxed states were Connecticut, Rhode Island, Missouri, and the District of Columbia; the highest-taxed states were Florida and Tennessee.

10. Burnham, John Chynoweth, “The Gasoline Tax and the Automobile Revolution,” Mississippi Valley Historical Review 48 (1961): 435–59; Seely, Bruce E., Building the American Highway System: Engineers as Policy Makers (Philadelphia, 1987), 210; John C. Teaford, The Rise of the States: Evolution of American State Government (Baltimore, 2002), 108–10, 135; R. Rudy Higgens-Evenson, The Price of Progress: Public Services, Taxation, and the American Corporate State, 1877 to 1929 (Baltimore, 2003), 89–91; Owen D. Gutfreund, Twentieth-Century Sprawl: Highways and the Reshaping of the American Landscape (Oxford, 2004), 28–34; Paul Sabin, Crude Politics: The California Oil Market, 1900–1940 (Berkeley, 2005), 166–73, 182–201; Michael R. Fein, Paving the Way: New York Road Building and the American State, 1880–1956 (Lawrence, Kans., 2008), 104–6, 146–53; Wells, Christopher W., “Fueling the Boom: Gasoline Taxes, Invisibility, and the Growth of the American Highway Infrastructure, 1919–1956,” Journal of American History 99 (2012): 74–77.

11. Hughes, Thomas Parke, “Technological Momentum in History: Hydrogenation in Germany 1898–1933,” Past and Present 44 (1969): 123–24; Gottfried Plumpe, Die I. G. Farbenindustrie AG: Wirtschaft, Technik und Politik 1904–1945 (Berlin, 1990), 267–68; Reiner Flik, Von Ford lernen? Automobilbau und Motorisierung in Deutschland bis 1933 (Cologne, 2001), 75–77; Rainer Karlsch and Raymond G. Stokes, Faktor Öl: Die Mineralölwirtschaft in Deutschland 1859–1974 (Munich, 2003), 152–53.

12. William Plowden, The Motor Car and Politics in Britain (Harmondsworth, 1973), 297; Paul Goldsmith, We Won, You Lost, Eat That! A Political History of Tax in New Zealand Since 1840 (Auckland, 2008), 169–70, 175. Because Plowden de-emphasized the British tax increases, the only previous comparative study, which relies heavily on Plowden’s work for the British side of the story, also missed the significance of the large European tax increases during the Great Depression: Dunn, James A. Jr., “The Importance of Being Earmarked: Transport Policy and Highway Finance in Great Britain and the United States,” Comparative Studies in Society and History 20 (1978): 29–53.

13. For a comprehensive listing of motor vehicle density per country in 1935, see Petroleum Facts and Figures, 5th ed. (New York, 1937), 17–19.

14. Calculated from U. S. Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1970 (Washington, D.C., 1975), 716 (car and truck registrations); Statistical Abstract of the United States 52 (1930): 388 (motorcycle registrations); Flik, Von Ford lernen? 280; B. R. Mitchell, British Historical Statistics (Cambridge, 1988), 557; G. T. Bloomfield, New Zealand: A Handbook of Historical Statistics (Boston, 1984), 248.

15. Nominal GDP data for 1929 to 1933 used in this article are from Louis Johnston and Samuel H. Williamson, “What Was the U.S. GDP Then?” MeasuringWorth, 2011, http://www.measuringworth.org/usgdp, accessed 6 December 2012; Lawrence H. Officer and Samuel H. Williamson, “What Was the U.K. GDP Then?” MeasuringWorth, 2011, http://www.measuringworth.org/ukgdp, accessed 6 December 2012; Statistics New Zealand, “Nominal Gross Domestic Product,” Long-Term Data Series, table E1.1, http://www.stats.govt.nz/browse_for_stats/economic_indicators/NationalAccounts/long-term-data-series/national-income.aspx, accessed 6 December 2012; Albrecht Ritschl, Deutschlands Krise und Konjunktur 1924–1934: Binnenkonjunktur, Auslandsverschuldung und Reparationsproblem zwischen Dawes-Plan und Transfersperre (Berlin, 2002), table B-5 in unpaginated appendix.

For population, I am using Historical Statistics of the United States, Colonial Times to 1970, 8; B. R. Mitchell, International Historical Statistics: Europe, 1750–2000, 5th ed. (New York, 2003), 85, 87; Bloomfield, New Zealand, 46.

Angus Maddison, in his widely cited compilation of worldwide per capita GDP statistics (most recently updated as “Statistics on World Population, GDP and Per Capita GDP, 1-2008 AD,” http://www.ggdc.net/MADDISON/oriindex.htm, accessed 8 December 2012), shows relations between British, German, and New Zealand GDP broadly similar to those cited in the text, but it lists the American per capita GDP as only 25 percent higher than the British in 1929. As argued extensively by Ward and Devereux, “Measuring British Decline,” however, Maddison’s methodology, which relies on using GDP deflators to project rates of change in real GDP back in time, does not produce valid comparisons between British and American per capita GDP at purchasing-power parity for this time period.

16. Bowden, S. M., “Demand and Supply Constraints in the Inter-War UK Car Industry: Did the Manufacturers Get It Right?” Business History 33 (1991): 247; Bowden, Sue and Turner, Paul, “Some Cross-Section Evidence on the Determinants of the Diffusion of Car Ownership in the Inter-War UK Economy,” Business History 35 (1993): 57; Flik, Von Ford lernen? 56–57; James J. Flink, The Automobile Age (Cambridge, Mass., 1988), 190.

17. Germany: interpolated from Dell, F., “Top Incomes in Germany Throughout the Twentieth Century: 1891–1998,” in Top Incomes over the Twentieth Century: A Contrast Between Continental European and English-Speaking Countries, ed. Atkinson, A. B. and Piketty, T. (Oxford, 2007), 401, 416. Great Britain: Colin Clark, National Income and Outlay (London, 1937), 109. New Zealand: calculated from New Zealand Census and Statistics Office, Statistical Report on Prices, Wages and Hours of Labour, . . . for the Year 1929 (Wellington, 1931), 132; A. B. Atkinson and A. Leigh, “The Distribution of Top Incomes in New Zealand,” in Top Incomes over the Twentieth Century, 356. United States: Maurice Leven, Harold G. Moulton, and Clark Warburton, America’s Capacity to Consume (Washington, D.C., 1934), 205 (this figure represents far more of an extrapolation than the other three, as American income taxes had a far higher exemption threshold). I am using thresholds in 1929 prices of 5,000 RM for Germany, £250 for Great Britain, £300 for New Zealand, and $1,500 for the United States. For the many pitfalls of working with income tax statistics, see the exhaustive discussions in Top Incomes over the Twentieth Century, which used these same statistics to derive long-term trends in income inequality across ten countries.

18. More precisely, the coefficient of determination, or R2, for a linear regression of degree of motorization on percent of high-earning households is 0.80. For a broader study tying motorization levels to income levels, see David W. Jones, Mass Motorization and Mass Transit: An American History and Policy Analysis (Bloomington, 2010).

19. Share of registered motor vehicles calculated from “34,950,915 Autos Listed In World,” New York Times, 21 February 1930; oil production from Petroleum Facts and Figures, 5th ed., 56–57; share of refinery capacity calculated from Harold F. Williamson, Ralph L. Andreano, Arnold R. Daum, and Gilbert C. Klose, The American Petroleum Industry: The Age of Energy, 1899–1959 (Evanston, 1963), 645, 734. For a historic panorama of the American rise to predominance in oil production, see Daniel Yergin, The Prize: The Epic Quest for Oil, Money, and Power (New York, 1991), 19–55, 78–113, 207–28.

20. Statistical Abstract of the United States 52 (1930): 779.

21. Petroleum Facts and Figures, 5th ed., 160.

22. Williamson et al., American Petroleum Industry, 510–11, 526–27; Karlsch and Stokes, Faktor Öl, 123–25; John McCrystal, 100 Years of Motoring in New Zealand (Auckland, 2003), 138. For the development of gas prices in London (which also governed all of England and most of Scotland), see “Petrol Prices Increase,” Manchester Guardian, 3 November 1933. For those in Berlin (slightly higher than those in North Sea port cities, but lower than those in interior cities further from the coast), see “Der Spritzwang—eine Tragikomödie,” ADAC Motorwelt, 18 December 1931, 6–7; Flik, Von Ford lernen? 78. For those in Auckland (which generally equaled those in the other major port cities of New Zealand and were lower than prices further inland), see “Penny Cheaper,” Auckland Star, 12 August 1931; “Petrol Prices,” Auckland Star, 23 December 1933.

23. W. H. Hoffert and G. Claxton, Motor Benzole: Its Production and Use (London, 1931), chap. 2; Carl T. Wiskott, Die Besteuerung der Kraftfahrzeuge und Kraftstoffe: Zur Schaffung eines Zeitgemässen Strassennetzes (Berlin, 1928), table 14; “Betriebsstoffverbrauch in Deutschland im Jahre 1928,” ADAC Motorwelt, 7 December 1928, 20; Rudolf Bier, “Treibende Kräfte,” Freiburger Zeitung, 24 February 1930.

24. Plumpe, I. G. Farbenindustrie, 255–65, 287; Hughes, “Technological Momentum,” 106–32; Stranges, Anthony N., “From Birmingham to Billingham: High-Pressure Coal Hydrogenation in Great Britain,” Technology and Culture 26 (1985): 726–57.

25. In the states of the old Confederacy, excluding only oil-rich Texas, the rate averaged 5.11 cents per gallon, while in the ten industrial core states of Massachusetts, Connecticut, Rhode Island, New York, New Jersey, Pennsylvania, Ohio, Michigan, Illinois, and California, it averaged only 2.91 cents per gallon. Calculated using rates from F. G. Crawford, The Administration of the Gasoline Tax in the United States, rev. ed. (New York, 1930), 8, weighted using gasoline consumption, as given in Public Roads Administration, Highway Statistics: Summary to 1945 (Washington, D.C., 1947), 6. See Crawford’s pamphlet for a very useful description of the overall system of the gasoline tax in 1929. For sectional differences in the imposition of the tax, see also Higgens-Evenson, The Price of Progress, 90–91. For urban motorists’ victories against the gasoline tax, see Frank B. Woodford, Alex J. Groesbeck: Portrait of a Public Man (Detroit, 1962), 213–14 (induced Michigan governor to veto tax increase); “Motorists in California Divide on Gasoline Tax,” New York Times, 26 July 1925 (induced California governor to veto tax increase); “Says Gasoline Motor Tax Will Soon Be Nation-Wide,” New York Times, 12 October 1924, and “Against Gas Tax,” Chicago Tribune, 7 December 1924 (overturned Massachusetts gas tax in referendum); “Illinois Gas Tax Unconstitutional,” Boston Globe, 25 February 1928 (initiated lawsuit that overturned Illinois gas tax).

26. “The Motor: Proposed Petrol Tax,” Evening Post (Wellington), 1 March 1924; “A Petrol Tax,” Evening Post (Wellington), 1 November 1927.

27. Plowden, The Motor Car and Politics, 214–17; Wa. Ostwald, “Zur Frage der Autosteuerreform,” ADAC Motorwelt, 7 June 1929, 3–4; Carl T. Wiskott, “Neuwagen- oder Kraftstoffsteuer?” ADAC Motorwelt, 19 July 1929, 14–16; Wa. Ostwald, “Zur Frage der Kraftstoffsteuer,” ADAC Motorwelt, 2 August 1929, 24. Motor license fees in 1929 (in terms of 2005 U.S. dollars per vehicle) averaged nearly $550 in Germany and nearly $750 in Great Britain, as compared to about $140 in the United States and about $90 in New Zealand. Calculated from data on motor vehicle registrations listed in note 14 and data on motor license fee revenues in Adamek and Saake, Die Strassenkosten und ihre Finanzierung, 112; Statistical Abstract for the United Kingdom 82 (1939): 178; Statistical Abstract of the United States 53 (1931): 406; New Zealand Transport Department, “Annual Report,” Appendix to the Journals of the House of Representatives, 1930 Session I, item H-40, p. 54. For a given class of motor vehicles, the difference in fees was even starker, but European motorists responded by preferentially using motorcycles, which had the lowest fees. In 1929, motorcycles represented 58 percent of the total motor vehicle fleet in Germany, 43 percent in Great Britain, 21 percent in New Zealand, and less than 1 percent in the United States. On the importance of motorcycles outside the United States, see Christoph Maria Merki, Der holprige Siegeszug des Automobils 1895–1930: Zur Motorisierung des Strassenverkehrs in Frankreich, Deutschland und der Schweiz (Vienna, 2002), 120–25, 398–99; Flik, Von Ford lernen? 80–85; Steve Koerner, “Four Wheels Good; Two Wheels Bad: The Motor Cycle Versus the Light Motor Car—1919–39,” in The Motor Car and Popular Culture in the Twentieth Century, ed. David Thoms, Len Holden, and Tim Claydon (Aldershot, 1998), 151–76.

28. For comparative discussions of the economic and fiscal course of the Great Depression in the various countries, see The World Economy and National Economies in the Interwar Slump, ed. Theo Balderston (Houndmills, 2003).

29. Moldenhauer to State Secretary Pünder, 3 February 1930, in Akten der Reichskanzlei, Weimarer Republik: Das Kabinett Müller II, ed. Martin Vogt (Boppard am Rhein, 1970), 1422–26; Moldenhauer to Pünder, 25 February 1930, Kabinett Müller II, 1495–1501; “Der ADAC gegen Monopole, Zoll- und Steuererhöhungen,” ADAC Motorwelt, 7 March 1930, 2. For background on Germany’s liquidity crisis in early 1930, see Theo Balderston, The Origins and Course of the German Economic Crisis, 1923–1932 (Berlin, 1993), 271–88; Ritschl, Deutschlands Krise und Konjunktur, 132–36; Hans-Peter Ullmann, Der deutsche Steuerstaat: Geschichte der öffentlichen Finanzen (Munich, 2005), 127–35.

30. “Ministerbesprechungen vom 27. February 1930, 10 und 16.15 Uhr,” Kabinett Müller II, 1509; “Ministerbesprechung vom 5. März 1930, 11 Uhr,” Kabinett Müller II, 1539; “Parteiführerbesprechung vom 8. März 1930, 10 Uhr im Reichstag,” Kabinett Müller II, 1555; “Parteiführerbesprechung vom 11. März 1930, 14 Uhr im Reichstag,” Kabinett Müller II, 1562; “Parteiführerbesprechung vom 26. März 1930, 16 Uhr im Reichstag,” Kabinett Müller II, 1601.

31. “Die Schraube ohne Ende,” ADAC Motorwelt, 7 March 1930, 1–2; “Wirtschaftsfeindliche Steuern,” ADAC Motorwelt, 21 March 1930, 1; E. Weighardt, “Die steuerliche Erdrosselung der Kraftfahrzeughaltung,” ADAC Motorwelt, 28 March 1930, 1–2.

32. Verhandlungen des Reichstags 427 (1930): 4196, 4199, 4551, 4554; “Deutscher Reichstag,” Freiburger Zeitung, 20 March 1930. Moldenhauer insisted that, upon becoming minister, he had resigned his supervisory board position and no longer had a financial connection to the firm.

33. “Kabinettssitzung vom 20. März 1930, 16 Uhr,” Kabinett Müller II, 1590; E. Weighardt, “Benzol-Zoll kontra Benzin-Zoll,” ADAC Motorwelt, 4 April 1930; “Um die Deckungsvorlagen,” Freiburger Zeitung, 8 April 1930; Verhandlungen des Reichstags 427 (1930): 4903, 4905. Customs duties were imposed on gross weight, including a standard allowance for container weight, while excise duties were imposed on net weight. To be fair to Moldenhauer, he had already intended to introduce the countervailing excise tax even before the Communist speakers drew public attention to his connection with I. G. Farben, but had delayed in order to give his officials time to draft the new tax properly. See Moldenhauer to Pünder, 25 February 1930, 1499; “Benzin und Benzol,” Freiburger Nachrichten, 1 March 1930.

34. “Fraktionsführerbesprechung vom 9. April 1930, 17.30 Uhr im Reichstagsgebäude,” in Akten der Reichskanzlei, Weimarer Republik: Die Kabinette Brüning I und II, ed. Tilman Koops (Boppard am Rhein: 1982), 44–45; Gerhard Schulz, Von Brüning zu Hitler: Der Wandel des politischen Systems in Deutschland, 1930–1933 (Berlin, 1992), 45–47.

35. Ullmann, Der deutsche Steuerstaat, 135; Schulz, Von Brüning zu Hitler, 99–120, 185–237; “Kabinettssitzung und Ministerbesprechung vom 29. September 1930, 18 Uhr,” Kabinette Brüning I und II, 471.

36. “Besprechung vom 7. Mai 1931, 16 Uhr,” Kabinette Brüning I und II, 1050–51 (quotation on 1051); Plumpe, I. G. Farbenindustrie, 267–68. On the poor economics of I. G. Farben’s hydrogenation process, see ibid., 265–67, and Hughes, “Technological Momentum,” 122–23. On the oil finds in Hannover and Thüringen, see Karlsch and Stokes, Faktor Öl, 142–52, and Dietrich Eichholtz and Titus Kockel, Von Krieg zu Krieg: Zwei Studien zur deutschen Erdölpolitik in der Zwischenkriegszeit (Leipzig, 2008), 112–14. On the factors affecting international gas prices, see Yergin, The Prize, 244–68.

37. “Chefbesprechung vom 27. Mai 1931, 16.30 Uhr,” Kabinette Brüning I und II, 1116; “Ministerbesprechung vom 1. Juni 1931, 16 Uhr,” Kabinette Brüning I und II, 1162.

38. Allmers, R., “Der Widersinn der neuen Mineralölzölle,” ADAC Motorwelt, 19 June 1931, 12–13; E. W., “Kraftfahrzeug-Haltung in Not!” ADAC Motorwelt, 10 July 1931, 2–4.

39. Ullmann, Der deutsche Steuerstaat, 136.

40. “Die wirtschaftliche Seite,” ADAC Motorwelt, 1 July 1932, 29; “Das Benzin-Quoten-Kartell,” ADAC Motorwelt, 9 September 1932, 2–3; “Die wirtschaftliche Seite,” ADAC Motorwelt, 20 January 1933, 28–29; Eichholtz and Kockel, Von Krieg zu Krieg, 120–34; Plumpe, I.G. Farbenindustrie, 269–79; Karlsch and Stokes, Faktor Öl, 165–68.

41. Parliamentary Debates, Commons, 5th ser., 237 (1930), cols. 2672, 2673 (quotation), 2680. On Labour Party attitudes toward taxes on the wealthy around 1930, see Martin Daunton, Just Taxes: The Politics of Taxation in Britain, 1914–1979 (Cambridge, 2002), 143–55; for other background on the 1930 budget, see ibid., 155–56; G. C. Peden, The Treasury and British Public Policy, 1906–1959 (Oxford, 2000), 212; Keith Laybourn, Philip Snowden: A Biography, 1864–1937 (Aldershot, 1988), 122–24; Philip Williamson, National Crisis and National Government: British Politics, the Economy and Empire, 1926–1932 (Cambridge: 1992), 76–77.

42. Daunton, Just Taxes, 156–57; Parliamentary Debates, Commons, 5th ser., 251 (1931), cols. 1407 (quotation), 1478, 1506, 1511, 1588, 1663, 1671, 1734, 1746–47, 1760; 253 (1931), cols. 663–67, 669–78; “Opinions on the Budget,” Manchester Guardian, 28 April 1931; “Higher Petrol Tax,” Times (London), 28 April 1931; “The Budget” [letter to editor], Times (London), 29 April 1931; “Higher ‘Bus Fares Most Unlikely,” Manchester Guardian, 29 April 1931; “The Budget” [letter to editor], Times (London), 1 May 1931.

43. Williamson, National Crisis, chaps. 8 and 9; Laybourn, Philip Snowden, 131–36; Peden, Treasury and British Public Policy, 237–44; Parliamentary Debates, Commons, 5th ser., 256 (1931), cols. 307–9, 800, 913–21; “Budget Views,” Manchester Guardian, 11 September 1931 (quotation); “Petrol Duty and Road Fund,” Times (London), 11 September 1931.

44. See, for example, the recent assessment in Middleton, Roger, “British Monetary and Fiscal Policy in the 1930s,” Oxford Review of Economic Policy 26 (2010): 414–41.

45. On the lack of domestic petrol production from either oil or coal, see Minister of Scientific and Industrial Research, “Production of Oil in New Zealand,” Appendix to the Journals of the House of Representatives, 1933 Session I, item H-34B.

46. “Customs Duties,” Evening Post (Wellington), 23 July 1930; “Petrol Tax Increased to 7d,” Auckland Star, 23 July 1930; “The Estimates,” Evening Post (Wellington), 25 July 1930; “The Financial Statement,” Akaroa Mail, 25 July 1930. For the general political situation, see Michael Bassett, Coates of Kaipara (Auckland, 1995), 159–60.

47. A Bombshell,” Evening Post (Wellington), 23 July 1930 (first quotation); “Dunedin Opinions,” Evening Post (Wellington), 24 July 1930; “South Island Will Suffer,” Evening Post (Wellington), 25 July 1930; “Raid on Funds,” Auckland Star, 26 July 1930; “The Petrol Tax,” Evening Post (Wellington), 29 July 1930; “Motorists Protest: United Stand,” Evening Post (Wellington), 31 July 1930; “Petrol Tax Protest,” Evening Post (Wellington), 2 August 1930; “Highway Finance,” Evening Post (Wellington), 31 July 1930.

48. “Altered Plan,” Evening Post (Wellington), 30 July 1930; “Friendly Advice,” Evening Post (Wellington), 1 August 1930; “Eight More Speeches,” Evening Post (Wellington), 7 August 1930; “Nearing the End,” Evening Post (Wellington), 8 August 1930; “The 3d. Concession Fare,” Evening Post (Wellington), 31 July 1930; “The Budget,” Evening Post (Wellington), 2 August 1930; “Budget Debate Continues,” Evening Post (Wellington), 6 August 1930; “Cutting the Cloth,” Evening Post (Wellington), 6 August 1930; “In Defence,” Evening Post (Wellington), 8 August 1930; “The Tax Reduced,” Evening Post (Wellington), 14 August 1930; “Passed at Last,” Auckland Star, 15 August 1930.

49. “The Estimates,” Evening Post (Wellington), 31 July 1931; “Taxes for All,” Auckland Star, 31 July 1931; “Motorists’ Escape,” Auckland Star, 1 August 1931; for Forbes’s 1931 budget, see also Goldsmith, We Won, You Lost, 167–68.

50. Bassett, Coates of Kaipara, 161–71.

51. “The National Accounts,” Evening Post (Wellington), 7 October 1931; “Petrol Tax,” Evening Post (Wellington), 15 October 1931; “Nelson News,” Evening Post (Wellington), 14 October 1931; “The Customs,” Evening Post (Wellington), 5 November 1931; for background on Downie Stewart’s supplemental budget, see also Goldsmith, We Won, You Lost, 168–71.

52. “Financial Proposals,” Evening Post (Wellington), 8 April 1932; “The Highways,” Evening Post (Wellington), 6 September 1932; “Petrol Tax,” Evening Post (Wellington), 6 May 1932.

53. “Return to Treasury of $2,540,000,” Evening Post (Wellington), 9 February 1933; “Price of Petrol,” Auckland Star, 10 February 1933; “Motorists Protest,” Evening Post (Wellington), 10 February 1933 (all quotations); “Petrol Sales,” Auckland Star, 16 February 1933; “‘Reservoir Dry,’” Auckland Star, 25 February 1933; “Tenpence,” Auckland Star, 25 February 1933. For the political background, see Bassett, Coates of Kaipara, 189–99; Goldsmith, We Won, You Lost, 174–76. It just so happened that, just at the moment when Coates was forcing through this final tax increase, the first load of cheap Soviet gasoline, imported by a company founded by several enterprising motor club officials, was on its way to New Zealand. Soon after the gasoline arrived in March 1933, a price war erupted that would lower the pre-tax price of gasoline in Auckland to $2.10 per U.S. gallon by the end of the year—a price drop that more than equaled the petrol tax increases of the previous four years. See “Motorists’ Petrol Company,” Evening Post (Wellington), 7 November 1931; “Oil Tankers,” Evening Post (Wellington), 25 February 1933; “From Russia,” Auckland Star, 6 March 1933; “Bulk Petrol,” Evening Post (Wellington), 15 March 1933; “Petrol Prices,” Auckland Star, 23 December 1933; McCrystal, 100 Years of Motoring, 127.

54. The best history of the struggle for an oil import tariff is in Norman E. Nordhauser, The Quest for Stability: Domestic Oil Regulation, 1917–1935 (New York, 1979), 47–56, 74–80; see also Gerald D. Nash, United States Oil Policy, 1890–1964: Business and Government in Twentieth-Century America (Pittsburgh, 1968), 105–110. For opposition to the 1932 import tariff, see Dewey L. Fleming, “Fight for Beer Will Be Added to Tax Battle,” Baltimore Sun, 9 March 1932; “50 Democrats Unite in Fight upon Sales Tax,” Baltimore Sun, 17 March 1932; Dewey L. Fleming, “Battle over Oil Import Tax Begun,” Baltimore Sun, 16 April 1932; Arthur C. Wimer, “Tariff Vote Is Explained by Walcott,” Hartford Courant, 22 May 1932; “Attention, Motorists” [editorial], Washington Post, 8 April 1932.

55. “Gasoline Price Advance,” Wall Street Journal, 17 June 1932; Armstrong, J. S., “Confidence Shown by Member Banks,” Baltimore Sun, 21 June 1932; Sullivan, James T., “Bootleg Gasoline May Come with Increase of Tax Here,” Boston Globe, 26 June 1932.

56. Yergin, The Prize, 258; Petroleum Facts and Figures, 5th ed., 160.

57. Burnham, “Gasoline Tax and the Automobile Revolution,” 450–55; “End Proposed To ‘Grab’ Policy in Getting Oil,” Christian Science Monitor, 13 November 1931; “Cuts Demanded In Gasoline Tax,” Los Angeles Times, 13 November 1931.

58. Average gasoline tax rate increases calculated from rates in Petroleum Facts And Figures, 5th ed., 179, which I have found to be the most accurate compilation for the Great Depression years. State rates were weighted using gasoline consumption, as given in Highway Statistics: Summary to 1945, 6. The Old South includes Virginia, North Carolina, South Carolina, Georgia, Florida, Alabama, Mississippi, Tennessee, Arkansas, and Louisiana; the Mountain West includes Montana, Wyoming, Idaho, Washington, Oregon, Nevada, Utah, Colorado, New Mexico, and Arizona. For specific state actions, see “Fla. Senate Votes More Gasoline Tax,” Atlanta Constitution, 5 July 1931; “Solons Compromise on Florida Salaries,” Atlanta Constitution, 26 July 1931; “Seven-Cent Gas Levy Voted for Tennessee,” Atlanta Constitution, 17 December 1931; W. A. Warn, “Republicans Seek Gasoline Tax Rise,” New York Times, 19 February 1930; “Fight Increase in Gasoline Tax,” New York Times, 26 February 1930; “Gas Tax Increase Meets Opposition from Motor Users,” Hartford Courant, 25 February 1931; “Rolph Will Call Special Session on Jobless Aid,” Los Angeles Times, 26 August 1931; “Club Fights ‘Gas’ Tax Rise,” Los Angeles Times, 12 September 1931; “Car Dealer Fight opens on Gas Tax,” Los Angeles Times, 15 September 1931; “Tax to Aid Jobless Urged,” Los Angeles Times, 14 October 1931; Myra Nye, “Tax Proposal under Attack,” Los Angeles Times, 3 November 1931; “Tax Plans Draw New Fire,” Los Angeles Times, 11 November 1931; “North Dakota Vote Bars Sunday Films,” Washington Post, 28 June 1930; “One Delegate for Murray Is Possible,” Hartford Courant, 18 March 1932; “Higher Gasoline Tax Is Proposed in Maine,” New York Times, 12 April 1931; “G.O.P. Leads in Maine,” Los Angeles Times, 13 September 1932.

59. Warn, W. A., “Legislature Gets Budget,” New York Times, 13 January 1932; “Auto and Oil Men Fight Gas Tax Rise,” New York Times, 1 February 1932; “Governor’s Budget Slashed $21,455,000,” New York Times, 3 February 1932; “New Motor Taxes Bitterly Opposed,” New York Times, 10 February 1932; “Legislature Votes 104 Million Tax Rise,” New York Times, 17 February 1932.

60. “Pinchot Calls Idle-Aid Session of Legislature,” Baltimore Sun, 2 November 1931; “Pinchot and Leaders Agree on Relief Plan,” New York Times, 2 December 1931; “Banks Refuse Again to Help Philadelphia,” Baltimore Sun, 17 December 1931; “Sees Motorists’ Fight to Defeat 5 Cent Gas Tax,” Chicago Tribune, 3 December 1931; Hal Foust, “Organized Auto Owners Protest Gas Tax Boost,” Chicago Tribune, 13 December 1931; “Jobless Relief Appeal Is Made to Legislators,” Chicago Tribune, 5 January 1932; Parke Brown, “See Way Out of Snarl Delaying Jobless Relief,” Chicago Tribune, 27 January 1932; “Editors Hear Some Taxation Facts,” Boston Globe, 27 January 1932; “Bill to Increase Gasoline Tax to 4 Cents Opposed,” Boston Globe, 10 February 1932; “Petroleum Companies to Fight Four-Cent Tax,” Boston Globe, 31 May 1932; “Votes State Loan of $20,000,000,” Boston Globe, 1 June 1932; “Fights Jersey Gasoline Tax Rise,” New York Times, 3 May 1932; “Fight Jersey Tax Rise,” New York Times, 9 May 1932; “Hague Sees Defeat of Jersey Tax Plan,” New York Times, 17 May 1932; “Budget Bill Voted by Jersey Senate,” New York Times, 2 June 1932; “Gov. Lehman Seeks Big Tax Increase,” Baltimore Sun, 31 January 1933; “Urges Wide Protest on Gasoline Tax Rise,” New York Times, 21 February 1933; W. A. Warn, “State Salary Cuts in Lower Levels Republican Plan,” New York Times, 1 March 1933; “Merchants Fight State Sales Tax,” New York Times, 9 March 1933; “N.Y. Beer Control Dispute Settled,” Baltimore Sun, 9 April 1933.

61. Williams, Robert E., “Tarheel Teachers Get No More Cuts,” New York Times, 24 July 1932; “South Dakota 5 Percent Loan Arranged,” Wall Street Journal, 19 January 1933; Erwin L. Levine, Theodore Francis Green: The Rhode Island Years, 1906–1936 (Providence, 1963), 147–48, 151–53; Mengert, Herbert R., “Gov. White Wages Stiff Fight in Ohio,” New York Times, 28 May 1933; “Sales Tax Proposal Is Defeated in Ohio House by 88–37 Vote,” Chicago Tribune, 21 June 1933; “Oklahoma to Offer $9,000,000 Notes,” Wall Street Journal, 15 May 1933; “Oklahoma Note Sale Planned,” Wall Street Journal, 26 October 1933; “Governor Wins As Legislature Ends,” Boston Globe, 23 July 1933; Finla G. Crawford, The Gasoline Tax in the United States 1934 (Chicago, 1935), 30.

62. Essary, J. F., “New Sources of Revenue Sought For U.S.,” Baltimore Sun, 26 May 1931; “Federal Gasoline Tax a Possibility,” Wall Street Journal, 26 May 1931; Hal Foust, “A. A. A. Opposes Federal Tax on Motor Vehicles,” Chicago Tribune, 5 June 1931; “Auto Tax Protests Registered,” Los Angeles Times, 16 August 1931; “U.S. Told to Live on Income,” Chicago Tribune, 14 January 1932; “New Tax Rise Asked by Mills to Yield $337,000,000 More,” New York Times, 17 February 1932.

63. “Sales Tax Draft Speeded by Mills,” New York Times, 25 February 1932; “Motordom on Parade,” Hartford Courant, 6 March 1932; “Organized Motorists Battle Proposed Taxes,” Los Angeles Times, 6 March 1932; “House Gets Bill Monday,” New York Times, 6 March 1932.

64. “Hoover in Senate Declares Fiscal Emergency Exists,” Christian Science Monitor, 31 May 1932; “Senate Taxes Gasoline to Balance Budget,” Boston Globe, 1 June 1932; J. B. McDonnell, “72–11 Ballot On Measure Ends Battle,” Washington Post, 1 June 1932; J. F. Essary, “Measure Adopted 72–11; One Cent Levy on Gasoline Is Approved by Members,” Baltimore Sun, 1 June 1932; “House Will Vote on Taxes Today,” Wall Street Journal, 4 June 1932; “Protest Federal Gasoline Tax,” New York Times, 3 June 1932. For broader analyses of the legislative struggles over what became the Revenue Act of 1932, see Blakey, Roy G. and Blakey, Gladys C., “The Revenue Act of 1932,” American Economic Review 22 (1932): 620–40; Jordan A. Schwarz, The Interregnum of Despair: Hoover, Congress, and the Depression (Urbana, 1970), 117–34; Mark H. Leff, The Limits of Symbolic Reform: The New Deal and Taxation, 1933–1939 (Cambridge, 1984), 22–24, 48–54.

65. “Mills Insists Need to Slice Costs Is Vital,” Christian Science Monitor, 7 December 1932; “Roosevelt to Extend Federal Gasoline Tax,” Boston Globe, 2 April 1933; “New Taxes Loom in Beer Bill Delay,” New York Times, 25 December 1932; “House Leaders Drop Move for Sales Tax,” Atlanta Constitution, 28 December 1932; “New Move Started to Extend Gas Tax,” Boston Globe, 22 January 1933; “Agreement Reached on Revenue Items,” New York Times, 10 June 1933; “‘Gas’ Tax Opposition,” Wall Street Journal, 28 January 1933; “Gas Tax Extension Meets Opposition,” Atlanta Constitution, 28 January 1933.

66. “Sales Tax Decision Left to Congress by the President,” New York Times, 16 May 1933; “Liquor Tax to Raise Public Works Funds,” Boston Globe, 19 May 1933; “Public Works Czar Is Contemplated,” Baltimore Sun, 3 May 1933; “Labor and Industry Back Recovery Bill,” Washington Post, 20 May 1933; “Roosevelt Wants Oil Control Plan in Recovery Bill,” New York Times, 21 May 1933; “Excise Tax List Is Put into Bill,” Boston Globe, 23 May 1933; “Gasoline Tax Fought,” New York Times, 24 May 1933; “Fight Federal Gasoline Tax Rise,” New York Times, 29 May 1933; “Gasoline Tax Rise Is Protested Here,” Boston Globe, 1 June 1933; “Protest Tax Moves at Hearing,” New York Times, 1 June 1933; E. L. Yordan, “Fight Gas Tax Rise,” New York Times, 4 June 1933; “Harrison Urges Shift in Tax Plan,” Baltimore Sun, 3 June 1933; W. B. Francis, “Roosevelt Recovery Act Wins Senate Passage,” Los Angeles Times, 10 June 1933; “Vets’ Bill Sent to Conference,” Boston Globe, 14 June 1933; “Election Results,” Los Angeles Times, 29 June 1933; David E. Kyvig, Repealing National Prohibition, 2nd ed. (Kent, Ohio, 2000), 178; “Ruling on Taxes,” Wall Street Journal, 15 November 1933. For a broader discussion of the tax provisions of the National Industrial Recovery Act of 1933, see Leff, Limits of Symbolic Reform, 54–61.

67. I have searched the papers of Secretary of the Treasury Ogden L. Mills at the Library of Congress in Washington, D.C., and the Central Files of the Office of the Secretary for 1917–32 in the Records of the Treasury Department (Record Group 56) at the National Archives, College Park, Md. It is entirely possible that there was no explicit decision reached to ask for only a small gasoline tax increase—that is, the thought might never even have occurred to Treasury Department officials to ask for more. If so, this would be quite consistent with my argument further below that the Treasury Department did not need a larger increase in this tax.

68. For the United States, I am taking anticipated revenues for the Revenue Act of 1932 (excluding postal-rate increases) from Blakey and Blakey, “Revenue Act of 1932,” 620–21; for the National Industrial Recovery Act of 1933 revenue provisions from “New Tax Plan Places Burden More Heavily upon Business,” Christian Science Monitor, 2 June 1933; and for the new beer tax from “New Federal Taxes Not to Be Proposed,” New York Times, 6 April 1933. I am also using $360 million of revenue for the Agricultural Adjustment Act of 1933 production taxes, estimated from data in Leff, Limits of Symbolic Reform, 12, and a $72 million revenue effect for the Smoot-Hawley Tariff of 1930, derived from average dutiable imports of around $1.2 billion and an average increase in the tariff rate of 6 percent, as given in Douglas A. Irwin, Peddling Protectionism: Smoot-Hawley and the Great Depression (Princeton, 2011), 105, 111. For New Zealand, I am taking revenue estimates from “Minister Explains,” Evening Post (Wellington), 23 July 1930; “Passed at Last,” Auckland Star, 15 August 1930; “Balancing the Budget,” Evening Post (Wellington), 19 August 1930; “Income Tax Reduced,” Evening Post (Wellington), 24 September 1930; “Budget Summary,” Evening Post (Wellington), 31 July 1931; “The National Accounts,” Evening Post (Wellington), 7 October 1931; “The Customs,” Evening Post (Wellington), 5 November 1931; “House of Representatives,” Evening Post (Wellington), 5 April 1932; “Return to Treasury of £2,540,000,” Evening Post (Wellington), 9 February 1933 (because in some cases the revenue estimates were provided only for partial years that had already begun, they had to be annualized to provide comparable information). For Great Britain, the revenue estimates are from Parliamentary Debates, Commons, 5th ser., 237 (1930), cols. 2673, 2677–78; 251 (1931), col. 1407; 256 (1931), cols. 307–9; 264 (1932), cols. 1424, 1438; 277 (1933), cols. 53, 54, 57. In each case, I have normalized the revenue estimates for different years by computing them as amounts per capita in 2005 U.S. dollars; normalizing them as a percentage of GDP would produce broadly similar results. Because of the opaque nature of budgeting in Germany during this era of presidential emergency decrees, I am not able to provide comparable figures for this country.

69. In terms of 2005 U.S. dollars, this works out to an increased tax burden of about $200 per person for the U.S., $230 per person for Great Britain, and $390 per person for New Zealand. The relatively smaller size of the tax increase in the United States during the Great Depression was due in large part to the smaller size of the government at its outset. In 1928/29, total central government (federal and state) taxes and customs duties were around 5 percent of American GDP, 10 percent of German and New Zealand GDP, and nearly 15 percent of British GDP. In recent years, political historians have made powerful arguments that the American state in the early twentieth century was not underdeveloped relative to those in Europe; see, for example, Novak, William, “The Myth of the ‘Weak’ American State,” American Historical Review 113 (2008): 752–72. But at least in terms of tax collections, the American central state was in fact smaller than those overseas.

70. The revenue estimate in New Zealand for the 1930 petrol tax hike works out to an assumed consumption of about 45 U.S. gallons per capita, while that for the 1933 petrol tax hike assumes about 33 U.S. gallons per capita. Meanwhile, the revenue estimate for the Revenue Act of 1932 calculates out to an assumed consumption of 120 gallons per capita, and that for the National Industrial Recovery Act of 1933 to a consumption of 99 gallons per capita. Actual highway-use consumption was 45 U.S. gallons per capita in New Zealand for the year ended 31 March 1934, and 114 gallons per capita in the United States for calendar year 1933; calculated from “Customs Revenue,” Evening Post (Wellington), 16 August 1934; Highway Statistics to 1945, 5. This works out to about 360 U.S. gallons per motor vehicle in New Zealand and 600 gallons per motor vehicle in the United States; thus, not only did the United States have more motor vehicles per capita, but it also consumed more gasoline per vehicle.