"Hatred and Profits: Under the Hood of the Ku Klux Klan"

This is the title of a fascinating economic analysis of the KKK’s most successful period, 1922-1925, authored by Roland G. Fryer, Jr. & Steven D. Levitt in a 2012 edition of the Quarterly Journal of Economics.

Here is their conclusion:

“The Ku Klux Klan symbolizes the extremes of race and religious hatred in America. Since its inception in the months after the Civil War, the Klan’s organization, mission, and power have varied tremendously, with  membership and political influence peaking in the mid-1920s when over a million Americans were members. Contrary to the conventional wisdom, however, our statistical analysis shows little evidence of a relationship between Klan activity and black or foreign-born migration, lynchings, or politics during this time period. Rather, the 1920s Klan is best described as an enormously successful marketing ploy: a classic pyramid scheme, officials at the top getting rich off of the individuals at the bottom, energized by sales agents with enormous financial incentives to sell hatred.”

Want to see some details? I quote again:

“The sale of robes generated almost $800,000 in profit for the national headquarters; these numbers are net of the costs of supplying the robes. The Grand Dragon, King Kleagle, and the Kleagles each received over $100,000 from robes. The Imperial Tax was the single greatest source of revenue, contributing nearly $3 million to national headquarters. The realm tax provided $1.65 million to Stephenson.

According to our estimates, the single state of Indiana generated nearly $4 million in revenues for the national headquarters.  After some modest expenses, most of that revenue went directly to the Imperial Wizard, with the Grand Wizard having claims on some of it. D. C. Stephenson, the head of the Indiana Klan, received nearly $2.5 million annually from the state’s operations. The head of the state sales hierarchy pocketed nearly $400,000 a year. To put these numbers into perspective, in current dollars, … Babe Ruth earned $613,000, and President Calvin Coolidge earned $885,000."