9 per cent of pension and
retirement
funds, 18.
Lundberg - The-Rich-and-the-Super-Rich-by-Ferdinand-Lundberg
THE RICH AND THE SUPER-RICH
A Study in the Power of Money Today
BY FERDINAND LUNDBERG Lyle Stuart, Inc. ? New York
THE RICH AND THE SUPER-RICH. Copyright 1968 by Ferdinand Lundberg. All rights reserved. No part of this book may be reproduced in any form without permission in writing from Lyle Stuart except by a newspaper or magazine reviewer who wishes to quote brief passages in connection with a review. Queries regarding rights and permissions should be addressed to Lyle Stuart at 239 Park Avenue South, New York, N. Y. 10003.
EDITED BY EILEEN BRAND
PUBLISHED BY LYLE STUART, INC. LIBRARY OF CONGRESS CATALOG NUMBER 67-10015
Dedication:
To Bernie and Lillian, Humanists of the Deed. Molto Affetuoso.
Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is difficult to understand. They think, deep in their hearts, that they are better than we are because we bad to discover the compensations and refuges of life for ourselves. Even when they enter deep into our world or sink below us, they still think that they are better than we are. They are different.
F. SCOTT FITZGERALD
ACKNOWLEDGMENTS
I wish to acknowledge with gratitude the permissions granted by the following publishers to make somewhat extended quotations from the books here listed:
To The Free Press of Glencoe for permission to quote from Robert E. Lane, Political Life, 1965
To Harper and Row, New York, for permission to quote from Joseph S. Clark, Congress: The Sapless Branch, 1964, and W. Lloyd Warner and James C. Abegglen, Big Business Leadership in America, 1955
To Alfred A. Knopf, Inc. , New York, for permission to quote from Alan Harrington, Life in the Crystal Palace, 1959
To Oxford University Press, New York, for permission to quote from C. Wright Mills, The Power Elite, 1956
To The Ronald Press Company, New York, for permission to quote from Louis Eisenstein, The Ideologies of Taxation, 1961, Copyright
Beyond this I am obviously indebted and feel appropriately grateful to writers and publishers for all shorter quotations from other works, and to leading newspapers such as the New York Times, the late New York Herald Tribune and the Wall Street Journal for the many excerpts taken from their pages.
Obviously nobody could have developed so large a canvas as that of the present book without summoning many scholarly witnesses. To mention all such here would be superogatory, as they are all prominently mentioned in the running text as well as in the appended notes. Needless to say, my debt to such is great and without them much would have been obscure which is now precise. However, much more work remains to be done in many areas that are yet obscure.
Special thanks are due to the staff of the New York Public Library, Central Branch, which was unfailingly helpful over a long period in locating for me much not readily accessible or very well-known data.
F. L.
Contents*
Note: This enormous (and enormously important) book is "under construction. " As each chapter is finished, it will be added. (22 August 2000)
I. The Elect and the Damned
II Room at the Top: The New Rich
III. Crime and Wealth
IV. The Inheritors: I
V. The Inheritors: II
VI. Where Are They Now?
VII. The American Plantation: A Profile
VIII. Understructure of the Finpolitan Elite
IX. The Great Tax Swindle
X. Philanthropic Vistas: The Tax-Exempt Foundations
XI. Ministers of Finpolity: The Upper Executives
XII. The Republic of Money: The Pubpols
XIII. The Cleverness of the Rich
XIV. Finpolitan Frontiers
XV. The Divine Spark among the Rich
XVI. The Cream of the Quest
XVII. Oligarchy by Default
APPENDIX A. Largest Net Taxable Incomes since 1940 (after Deductions) APPENDIX B. Companies with Largest Total Assets
? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? One
THE ELECT AND THE DAMNED
Most Americans--citizens of the wealthiest, most powerful and most ideal-swathed country in the world--by a very wide margin own nothing more than their household goods, a few glittering gadgets such as automobiles and television sets (usually purchased on the installment plan, many at second hand) and the clothes on their backs. A horde if not a majority of Americans live in shacks, cabins, hovels, shanties, hand- me-down Victorian eyesores, rickety tenements and flaky apartment buildings--as the newspapers from time to time chortle that new Russian apartment-house construction is falling apart. (Conditions abroad, in the standard American view, are everywhere far worse than anywhere in the United States. The French, for example, could learn much about cooking from the Automat and Howard Johnson. )
At the same time, a relative handful of Americans are extravagantly endowed, like princes in the Arabian Nights tales. Their agents deafen a baffled world with a never- ceasing chant about the occult merits of private-property ownership (good for everything that ails man and thoroughly familiar to the rest of the world, not invented in the United States), and the vaulting puissance of the American owners.
It would be difficult in the 1960's for a large majority of Americans to show fewer significant possessions if the country had long labored under a grasping dictatorship. How has this process been contrived of stripping threadbare most of the populace, which once at least owned small patches of virgin land? To this fascinating if off-color question we shall give some attention later.
Statements such as the foregoing on the rare occasions when they are ventured (although strictly true and by no means new)1 are bound to be challenged by the alert propaganda watchdogs of the established order. These proprgandists, when hard pressed, offer an incantation about a mythical high American standard of living which on inspection turns out to be no more than a standard of gross consumption. The statements must, therefore--particularly in this age of burgeoning one-sided affluence-- be monumentally and precisely documented and redocumented. Not that this will deter the watchdogs, who have limitless resources of casuistry and dialectic to fall back upon as well as an endless supply of white paper from denuded forests.
Critical Scholarship Takes a Hand
But (fortunately for truth) critical scholarship, roused from its one-time somnolence by echoing charges and counter-charges over the years, has finally been led to make penetrating, detailed, exhaustive and definitive revelations of the underlying facts-- although the findings of such scholarship are not featured in the controlled prints, are not publicly discussed and are not even alluded to in polite society. As far as the broad public is concerned in an age of unrestrained publicity, when even the martyrdom of a virile young president is made overnight into a profitable industry, the facts about the skeletons in the closet of the affluent society are shrouded in secrecy for all except those queer beings willing to delve for hours among dusty tomes in library crypts.
Nonetheless, irreproachable scholarly analyses of diamond-hard official data fully support my initial assertions, which to the average newspaper reader. may seem incredibly. iconoclastic, ludicrously wrongheaded or the maunderings: of an idiot. Further along, some of the complex reasons for the odd situation will be touched upon, after the paramount position of the wealthy and the ways they are maintained have been fully depicted.
A Nation of Employees
Most adult Americans in the quasi-affluent society of today, successors to the resourceful (and wholly imaginative) Americano of Walt Whitman's lush fantasy, are nothing more than employees. For the most part they are precariously situated; nearly all of them are menials. In this particular respect Americans, though illusion-ridden, are like the Russians under Communism, except that the Russians inhabit a less technologized society and have a single employer, There are, of course, other differences (such as the fact that Americans are allowed a longer civil leash), but not of social position. And this nation of free and equal employees is the reality that underlies and surrounds the wealthy few on the great North American continent.
Those few newspapers that make a practice of printing foreign news occasionally survey Latin American countries. The writers are invariably grieved to find a small oligarchy of big landowners in control, with the remainder of the population consisting of sycophantic hangers-on and landless, poverty-stricken peasants. But I have never seen it remarked that the basic description, with the alteration of a few nouns, applies just as well to the United States, where the position of the landowners is occupied by the financiers, industrialists and big rentiers and that of the peasants by the low-paid employees (all subject to dismissal for one reason or other just like the peasants).
The Banana Republics
These same writers, focusing attention on Central America, refer caustically to the "banana republics"--those countries, economically dominated mainly by the United Fruit Company, where political leaders are bought and sold like popcorn and where ambitious insurrectos from time to time overthrow earlier insurrectos who run the government for their own profit. But the United States, sacred land of Washington, Jefferson, Franklin and Madison--"Of thee I sing"--itself often displays many similar aspects, mingled with a heady atmosphere at times reminiscent of rural carnivals, Oriental bazaars, raucous gambling houses and plush bordellos. If anyone thinks I exaggerate he should notice how the mingled images of Coney Island, Atlantic City, Miami Beach, Hollywood, Palm Springs, Broadway, Las Vegas and Madison Avenue often disconcertingly float into plain view at political conventions, state funerals, elections, court proceedings and congressional hearings, much to the glee of enchanted but I fear disrespectful and unconsciously alienated spectators.
Conditions in the United States, mutatis mutandis, are not nearly so different from conditions in other countries as North American natives are customarily led to suppose by imaginative editors. As in the "banana republics" we have assassinations and attempted assassinations of the chief of state at regular intervals--Lincoln, Garfield, McKinley and Kennedy shot dead; Truman and both Roosevelts the targets of would-be assassins; any number of local jefes politicos bullet-drilled. This is not to say that those differences that exist between the United States and the Central American republics may not be important. The point is that, while the differences in favor of the United States
are endlessly stressed for public edification--such as the prevalence north of the Rio Grande of indoor flush toilets, an engineering marvel long antedating television sets-- the grim similarities are seldom or never alluded to. To refer to them would be considered unpatriotic.
In the matter of domestic gunplay, for example, the United States far outdoes any of the "banana republics. " Since 1900 more than 750,000 persons have died in the United States of nonmilitary gunshot wounds inside or outside the home, and the annual death rate from gunplay is now 17,000, or about 50 per day. 2 Other forms of violence are equally prevalent; and violence in general, to the dismay of the genteel, is the staple theme in American films and television, reflecting the external society. More than one and a half million have been killed by the automobile since its vaunted introduction into the United States.
Crime to purloin a phrase, is rampant. From the Wickersham Report of 1931 down to a presidential commission in 1967, several national commissions have surveyed, recommended and wrung their hands as the tide of crime (much of which is not reported) has risen. In addition to frequently disclosed tie-ins of organized crime with local politicians, the associations of the organized underworld are openly traced up to the congressional level. 3
In ancient days the messenger who brought bad news to the king was frequently executed. Those who produce unwanted messages such as these are now generally stigmatized as "muckrakers," themselves unclean, as though an epithet disposed of the phenomenon.
Even in such a presumably distinctive Latin American feature as the intrusiveness of the military, the United States now clearly overshadows anything in this line the Latin American republics are able to show. Compared with the political power and influence of the American military today, Hohenzollern Germany (at one time designated by horrified American publicists as the acme of cold militarism in modern times) was only a one-cylinder, comic-opera affair. The Pentagon of today--its agents busy in Congress and the Executive Branch, with the politicians obviously standing in awe of the bemedaled generals, with the defense-industry corporations loaded with retired officers--could flatten an entity like Hohenzollern or Hitler Germany with a few well- placed blows. The youth, too, are freely conscripted, as though they were German peasants.
Even the presidents are beginning to feel bewildered by it all. Dwight D. Eisenhower in his presidential "farewell address" called attention to "this conjunction of an immense military establishment and a large arms industry" and warned the country to be on "guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. " He said, "The potential for the disastrous rise of misplaced power exists and will persist," and the influence of the military "is felt in every city, every state house, every office of the federal government. " With the military behind it if not over it, the federal government is assuming a dominating role in many directions, he said, "and is gravely to be regarded. "
President John F. Kennedy felt that he had been duped by the Pentagon and the CIA into acquiescing in the long-planned invasion of Cuba, which foundered at the Bay of Pigs as Kennedy back-pedaled on ordering air support; this action gained him many infuriated rightist enemies. Many partisans of President Lyndon B. Johnson assert that he was misted by military advice into the costly Vietnam involvement that cast a deepening shadow over his administration. However, some leading generals from the beginning opposed the glorious adventure.
While American generals do not formally make political decisions, they (as have generals in many other countries since 1914) do evidently proffer advice that makes certain decisions and consequences a foregone conclusion. 4 They are far from inconsequential politically.
Except that the United States has such large numbers of industrial and office workers, rather than landless peasants, it has few features to which general descriptions of Latin American society do not apply. The United States is a great deal more like Brazil and Argentina, for example, than it is like France or England (two countries upon which most Americans are inclined to look with patronizing reservation).
Even in such a distinctive United States feature as the separation of church and state there is now a strong movement, led by politicians with their eyes on the least instructed voters, for a direct supportive involvement of the state in the affairs of the church, an involvement that would presumably gain these politicians the support of the church. In this feature, then, there is a movement to make the United States even more like Latin America and less like Europe, where church and state are tending to become more and more separate in most jurisdictions.
It might almost be said that there is a growing tendency to model the United States, apart from its industrial features, upon the "banana republics," thus making it the Banana Republic par excellence.
The Statistical Setting
The setting of our story is of necessity statistical. And statistics have the merit of being succinct. I am aware, however, that many readers cannot face statistics, a fact that leads seasoned editors to advise writers to dispense with them or to hide them in the back of the book. Apparently childhood encounters with arithmetic under inferior school conditions have developed in many people (even the cultivated) a distaste for numbers, and when they see them they merely skip. But it will repay readers to study and ponder carefully the following figures.
While good studies have been made for some decades, three recent high-level inquiries have developed the picture in sharper and more exact detail than ever before. They represent a long series of analyses of the extent and concentration of American wealth that was begun by G. K. Holmes in 1893. These analyses, showing greater and greater precision with the passing years, are listed in the chapter notes. 5
The three recent studies were made, independently, by Professor Robert J. Lampman of the University of Wisconsin for the National Bureau of Economic Research, by the Survey Research Center of the University of Michigan as a continuing project in 1947, 1952, 1956, 1960 and 1963; and by the Harvard historian Gabriel Kolko as presented in his Wealth and Power in America (1962). I will touch upon these, as well as a resounding official clincher, in this order.
Running to 286 pages, containing 138 formidable tables and 37 charts (including 13 Lorenz curves) and employing the most sophisticated applicable mathematics, the Lampman study was published by Princeton University Press in 1962. 6
What Professor Lampman did was to obtain basic data from federal estate tax returns for the years 1922, 1929, 1933, 1939, 1945, 1949, 1953 and in some cases for 1954 and 1956; but he concentrated attention on 1953. Such tax returns are required by law of all decedents with estates exceeding the level of exemption, which was $50,000 for 1922- 26, $100,000 for 1926-32, $50,000 for 1932-35, $40,000 for 1935-42 and $60,000 after 1942.
With the data in hand, Professor Lampman then employed the established estate- multiplier method. This requires that one multiply the number and property of decedents in each age-sex group by the inverse of the general mortality rate for each such group. One thereby arrives at an estimate of living persons and the amount of estate in each age-sex group and in each estate size.
Professor Lampman illustrates the method as follows: "Suppose that out of a population of 1,000 men aged 40 to 50, two men died in one year with estates of $100,000 or more. Suppose further that it is known that 5 per cent of all the 1,000 men aged 40 to 50 died in that year. Then it may be assumed that the two men who died with $100,000 were 5 per cent of all the living men in the group with $100,000. Hence, to estimate the number of living men with $100,000, we should multiply two by twenty (the inverse of 5 per cent) to get the answer of forty living men with $100,000 or more. "7
The Lampman Findings
What Lampman found was as follows:
1. More than 30 per cent of the assets and equities of the personal sector of the economy (about 20 per cent of all wealth in the country being government-owned) in 1953 was held by 1. 6 per cent of the adult population of 103 million. 8
2. This group of 1. 6 per cent owned 32 per cent of all privately owned wealth, consisting of 82. 2 per cent of all stock, 100 per cent of state and local (tax-exempt) bonds, 38. 2 per cent of federal bonds, 88. 5 per cent of other bonds, 29. 1 per cent of the cash, 36. 2 per cent of mortgages and notes, 13. 3 per cent of life insurance reserves, 5. 9 per cent of pension and retirement funds, 18. 2 per cent of miscellaneous property, 16. 1 per cent of real estate and 22. 1 per cent of all debts and mortgages. 9
3. The following table shows the percentage of national wealth-holdings for the top 1/2 of 1 per cent and 1 per cent for the indicated years. 10
1/2 of 1 Per Cent
of Adult Population
(per cent)
1922 29. 8
1929 32. 4
1933 25. 2
1939 28. 0
1945 20. 9
1949 19. 3
1953 22. 7
1954 22. 5
1956 25. 0
1 Per Cent
of Adult Population
(per cent)
31. 6
36. 3
28. 3
30. 6
23. 3
20. 8
24. 2
. . . .
26.
9 per cent of pension and retirement funds, 18. 2 per cent of miscellaneous property, 16. 1 per cent of real estate and 22. 1 per cent of all debts and mortgages. 9
3. The following table shows the percentage of national wealth-holdings for the top 1/2 of 1 per cent and 1 per cent for the indicated years. 10
1/2 of 1 Per Cent
of Adult Population
(per cent)
1922 29. 8
1929 32. 4
1933 25. 2
1939 28. 0
1945 20. 9
1949 19. 3
1953 22. 7
1954 22. 5
1956 25. 0
1 Per Cent
of Adult Population
(per cent)
31. 6
36. 3
28. 3
30. 6
23. 3
20. 8
24. 2
. . . .
26. 0
4. The estimated gross estate size for the total adult population in 1953, obtained by extension of the same methods, was as follows:11
Gross Estate Number of
Size (dollars) Persons Aged
Average
Estate Size
(dollars)
Total Gross
Estate
(billion
dollars) Percentage
20 and Over
(millions) Percentage
0 to 3,500 51. 70 50. 0 1,800 93. 1 8. 3
3,500-10,000 19. 00 18. 4 6,000 114. 0 10. 2
10,000-20,000 21. 89 21. 2 15,000 328. 4 29. 3
20,000-30,000 6. 00 5. 8 25,000 150. 0 13. 4
30,000-40,000 2. 00 1. 9
40,000-50,000 0. 80 0. 8
50,000-60,000 0. 35 0. 3
All under 101. 74 98. 4
60,000
60,000-70,000 0. 18 0. 1
over 60,000 1. 66 1. 6
All estate 103. 40 100. 0
sizes
Median estate size
35,000
45,000
55,000
7,900
61,000
186,265
10,800
3,500
70. 0 6. 3
36. 0 3. 2
19. 3 1. 7
810. 8 72. 4
10. 5 0. 9
309. 2 27. 6
1,120. 0 100. 0
In this table is found one verification of my initial paragraph. It shows that 50 per cent of the people, owning 8. 3 per cent of the wealth, had an average estate of $1,800-- enough to cover furniture, clothes, a television set and perhaps a run-down car. Most of these had less; many had nothing at all. Another group of 18. 4 per cent, adding up to 68. 4 per cent of the population, was worth $6,000 on the average, which would probably largely represent participation in life insurance or emergency money in the bank. Perhaps this percentage included some of the select company of "people's capitalists" who owned two or three shares of AT&T.
Another 21. 89 per cent of adults, bringing into view 92. 59 per cent of the population, had $15,000 average gross estates--just enough to cover a serious personal illness. This same 92-plus per cent of the population all together owned only 47. 8 per cent of all assets.
Top Wealth-Holders
The number of persons in the top 1 per cent of wealth-holders through the decades was as follows:12
Years Number of Persons
(thousands)
1922 651
1929 744
1939 855
1945 929
1949 980
1953 1,030
Percentage Share
of Gross Estates
32
38
33
26
22
25
But the top 11 per cent of persons in the magic 1 per cent (or 0. 11 per cent) held about 45 per cent of the wealth of this particular group while the lower half (or 0. 50 per cent) held only 23 per cent. 13
Says Lampman: "The personally owned wealth of the total population in 1953 amounted to about $1 trillion. This means that the average gross estate for all 103 million adults was slightly less than $10,000, The median would, of course, be considerably lower. In contrast the top wealth-holder group had an average gross estate of $182,000. The majority of this top group was clustered in estate sizes below that average. Of the 1. 6 million top wealth-holders, over half had less than $125,000 of gross estate and less than 2 per cent (27,000 persons) had more than $1 million. "14
There were, then, in excess of 27,000 millionaires in the country in 1953--not only the greatest such aggregation at one time in the history of the world but a number greater than the aggregation throughout all of history before 1875 (as of 1966, millionaires numbered about 90,000). If consumer prices had remained stable from 1944 to 1953 there would have been fewer. "In 1944 there were 13,297 millionaires," says Lampman. "In 1953 there were 27,502 millionaires in 1953 prices, but only 17,611 in 1944 prices. "15
What of the 1965-67 year-span? As the prices of stocks advanced tremendously in the preceding dozen years, one can only conclude that the proportion of wealth of the top wealth-holders also advanced impressively. For this small group, as we have seen, owns more than 80 per cent of stocks. The Dow-Jones average of 65 industrial stocks stood at 216. 31 at the end of 1950; at 442. 72 in 1955; at 618. 04 in 1960; and at 812. 18 in March, 1964. As of May, 1965, it was well above 900. The less volatile Securities and Exchange Commission index of 300 stocks shows the same quadrupling in value, standing at 41. 4 in 1950; 81. 8 in 1955; 113. 9 in 1960; and 160. 9 in March, 1964. How many employees have experienced a fourfold increase in salaries in the same period?
The rise in value of stocks, however, surely invalidates one of Lampman's speculations, to this effect: "Our finding that the share of wealth held by the top 2 per cent of families fell from about 33 to 29 per cent from 1922 to 1953, or about one- eighth, would seem compatible with . . . the general belief that there has been some lessening of economic inequality in the United States in recent decades. "16 The more recent rise in stock prices and in corporation earnings shatters even that slight concession.
Professor A. A. Berle, Jr. , has rushed forward to hail the Lampman showing that the upper 1 per cent saw its participation reduced from 32 per cent of all wealth in 1922 to 25 per cent in 1953; but his celebration was premature and he did not fully report Lampman, who indicated that the participation had been reduced from 1922 to 1949 but thereafter was again increasing. 17
The Lampman findings were extended to 1958 in an extremely sophisticated statistical critique presented in 1965 to the American Statistical Association by James D. Smith and Staunton K. Calvert of the Statistics Division of the Internal Revenue Service. 18
After reviewing Lampman, revising him in a minor particular, Smith and Calvert conclude that "top wealth-holders owned 27. 4 percent of gross and 28. 3 percent of net prime wealth in 1953, but increased their share to 30. 2 and 32. 0 percent respectively by 1958. These data support Lampman's conclusion that the share of top wealth-holders has been increasing since 1949. " Prime wealth, as they explain, is total wealth less the value of assets in trust funds and pension reserves.
This is where the question rests on the basis of the most recent data supplied by leading authorities in the field: Concentration of wealth in a few hands is intensifying.
Actually, in view of market valuations, the share of top wealth-holders at this writing is easily the greatest in history. It is my hypothesis that the share of the top 1/2 of 1 per cent now exceeds the 32. 4 per cent of this group for 1929. Later studies should show that the proportions for all groups of top wealth-holders studied by Lampman have been significantly exceeded. So much for Lampman although there is much else in his razor'- sharp book that merits attention. 19
The University of Michigan Study
Although showing some minor variations, the continuing University of Michigan survey dovetails with the Lampman study and fully supports it.
First, it was found that 3 per cent of spending units in 1953 had $60,000 or more total assets; this compares with 2. 3 per cent of individuals in the Lampman study. A "spending unit" consisted of any one or more persons established as a household.
According to this University of Michigan "Survey of Consumer Finances," the upper 11 per cent of the nation's 54 million spending units held 56 per cent of the total assets and 60 per cent of the net worth of all private holdings in the country. "While this group held only 30 per cent of consumer capital," Lampman comments (p. 195), they held 80 per cent of business and investment assets. " 20
According to the 1960 University of Michigan "Survey of Consumer Finances," 86 per cent of all spending units in the country owned no stock whatever. Of incomes under $3,000, 95 per cent owned no stock; of incomes of $3,000-$5,000, 93 per cent owned no stock; and of incomes of $5,000-$7,500, 87 per cent owned no stock. The class of $7,500-$10,000 incomes was 78 per cent without stock ownership, while even in the $10,000-$15,000 income class 61 per cent owned no stock. In 1963 a total of 83 per cent owned no stock. Stock ownership, it is clear, was being somewhat more widely diffused as long-term holders gradually unloaded at rising prices. Whereas in 1953 only 44 per cent of the income class above $15,000 owned no stock, in 1960 this same broad class included only 26 per cent without stock ownership. 21
For some years the New York Stock Exchange and the Advertising Council, as part of a campaign to show that a "people's capitalism" exists with a widely diffused ownership in American industry, have been busily pyramiding figures. These computations show that in 1956 there were 8,630,000 American shareholders, and in 1962 there were 17,010,000. 22 The figure more recently being cited is 20 million . 23
Even though the method of their compilation is challenged by statisticians, these computations could all be true and still not after the implications of the Lampman analysis and University of Michigan surveys. For if 17 per cent of spending units owned stock in 1963, as the University of Michigan survey indicates, that would be well over 17 million persons. And anyone would qualify as a stockholder if he owned only one share worth 10 cents.
That most stockholders own trivial amounts of stock is shown by the University of Michigan figures for 1963. The 17 per cent of spending units holding stock broke down in this way: 3 per cent held less than $500 worth; 2 per cent held $500 to $999 worth; 4 per cent held $1,000 to $4,999 worth; and 2 per cent held $5,000 to $9,999 worth. As far as stock ownership goes, these are all insignificant figures. Yet they make up 75 per cent of the households holding stock. Only 4 per cent of all spending units owned more than $10,000 of stock. 24 But most of this group, exceeding four million people, also owned little stock; for we are already aware that a group consisting of 1. 6 per cent of the population owns more than 80 per cent of all stock, 100 per cent of state and local government bonds and 88. 5 per cent of corporate bonds. Less than 20 per cent of all stock in 1963, then, was owned by some 15. 4 million people.
Throughout this study, therefore, it is going to be taken as fully established that 1. 6 per cent of the adult population own at least 32 per cent of all assets, and nearly all the investment assets, and that 11 per cent of households (following the University of Michigan study) own at least 56 per cent of the assets and 60 per cent of the net worth. It is even possible, as we have seen, that 1/2 of 1 per cent own more than one-third of all productive assets as of 1965-67. It is evident that this leaves very little to be apportioned among 90 per cent of the population. It will be recalled that Lampman showed 50 per
cent owning virtually nothing, with an average estate size of only $1,800 as of 1953. This same study, according to my tabulation numbered 4, showed that 89. 6 per cent of the adult population had available to it only 47. 8 per cent of the assets, while 50 per cent had only 8. 3 per cent. The University of Michigan figures and the Lampman figures, in short, coincide rather closely although developed by different methods.
Supporting Studies
Every other serious study supports these findings. The Senate Temporary National Economic Committee (TNEC) just before World War II inquired into the distribution of stock among 8. 5 million shareholders in 1,710 major companies as of 1937-39 and found that 4 per cent of all common stockholders held 74. 9 per cent of the stock, and 4. 5 per cent of the preferred stockholders held 54. 8 per cent. 25 Looking into the same situation as of 1951, the Brookings Institution of Washington, D. C. , found that in 2,991 major corporations only 2. 1 per cent of the holders owned 58 per cent of the common stock and 1. 1 per cent of the holders owned 46 per cent of the preferred stock. Two- thirds of all common stockholders owned only 10 per cent of the shares. 26 Harvard's J. Keith Butters estimated that in 1949 the spending units (households) that owned $100,000 or more in marketable stock, comprising 1 /5 of 1 per cent of all spending units and 2 per cent of stockholders owned between 65 and 71 per cent of all marketable stock held by individuals. 27 None of these studies took into account the beneficial interest of individuals in stock held by institutions for the account of individuals, which swells the percentages proportionately.
The Lampman estate studies do not necessarily reveal the sizes of fortunes. 'This is because many of the fortunes are systematically distributed during the lifetime of the owner, mainly for the benefit of heirs. At the time of death the fortune is reduced.
Again, in extrapolating from the estates to the rest of the population, at least two distortions are discernible. First, only adults are considered by Lampman, whereas a considerable number of children are millionaires owing to having had trust funds settled upon them. Second, the economic position of age groups is not strictly comparable between the affluent and the poor because of an average earlier death rate for the latter.
But, on the whole, the Lampman study came closer than anyone had yet come to showing the asset position of all adult age-sex groups.
Definitive Data from the Federal Reserve
Strongly persuasive though all these studies are, it is possible to be definitive about the distribution of wealth in the United States, on the basis of findings put forth recently under the highest official auspices.
In a complex and comprehensive study prepared for the Board of Governors of the Federal Reserve System on the basis of Census Bureau data under the title Survey of Financial Characteristics of Consumers, the cold figures are officially presented on asset holdings as of December 31, 1962, removing the entire subject from the realm of pettifogging debate.
A Study in the Power of Money Today
BY FERDINAND LUNDBERG Lyle Stuart, Inc. ? New York
THE RICH AND THE SUPER-RICH. Copyright 1968 by Ferdinand Lundberg. All rights reserved. No part of this book may be reproduced in any form without permission in writing from Lyle Stuart except by a newspaper or magazine reviewer who wishes to quote brief passages in connection with a review. Queries regarding rights and permissions should be addressed to Lyle Stuart at 239 Park Avenue South, New York, N. Y. 10003.
EDITED BY EILEEN BRAND
PUBLISHED BY LYLE STUART, INC. LIBRARY OF CONGRESS CATALOG NUMBER 67-10015
Dedication:
To Bernie and Lillian, Humanists of the Deed. Molto Affetuoso.
Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is difficult to understand. They think, deep in their hearts, that they are better than we are because we bad to discover the compensations and refuges of life for ourselves. Even when they enter deep into our world or sink below us, they still think that they are better than we are. They are different.
F. SCOTT FITZGERALD
ACKNOWLEDGMENTS
I wish to acknowledge with gratitude the permissions granted by the following publishers to make somewhat extended quotations from the books here listed:
To The Free Press of Glencoe for permission to quote from Robert E. Lane, Political Life, 1965
To Harper and Row, New York, for permission to quote from Joseph S. Clark, Congress: The Sapless Branch, 1964, and W. Lloyd Warner and James C. Abegglen, Big Business Leadership in America, 1955
To Alfred A. Knopf, Inc. , New York, for permission to quote from Alan Harrington, Life in the Crystal Palace, 1959
To Oxford University Press, New York, for permission to quote from C. Wright Mills, The Power Elite, 1956
To The Ronald Press Company, New York, for permission to quote from Louis Eisenstein, The Ideologies of Taxation, 1961, Copyright
Beyond this I am obviously indebted and feel appropriately grateful to writers and publishers for all shorter quotations from other works, and to leading newspapers such as the New York Times, the late New York Herald Tribune and the Wall Street Journal for the many excerpts taken from their pages.
Obviously nobody could have developed so large a canvas as that of the present book without summoning many scholarly witnesses. To mention all such here would be superogatory, as they are all prominently mentioned in the running text as well as in the appended notes. Needless to say, my debt to such is great and without them much would have been obscure which is now precise. However, much more work remains to be done in many areas that are yet obscure.
Special thanks are due to the staff of the New York Public Library, Central Branch, which was unfailingly helpful over a long period in locating for me much not readily accessible or very well-known data.
F. L.
Contents*
Note: This enormous (and enormously important) book is "under construction. " As each chapter is finished, it will be added. (22 August 2000)
I. The Elect and the Damned
II Room at the Top: The New Rich
III. Crime and Wealth
IV. The Inheritors: I
V. The Inheritors: II
VI. Where Are They Now?
VII. The American Plantation: A Profile
VIII. Understructure of the Finpolitan Elite
IX. The Great Tax Swindle
X. Philanthropic Vistas: The Tax-Exempt Foundations
XI. Ministers of Finpolity: The Upper Executives
XII. The Republic of Money: The Pubpols
XIII. The Cleverness of the Rich
XIV. Finpolitan Frontiers
XV. The Divine Spark among the Rich
XVI. The Cream of the Quest
XVII. Oligarchy by Default
APPENDIX A. Largest Net Taxable Incomes since 1940 (after Deductions) APPENDIX B. Companies with Largest Total Assets
? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? One
THE ELECT AND THE DAMNED
Most Americans--citizens of the wealthiest, most powerful and most ideal-swathed country in the world--by a very wide margin own nothing more than their household goods, a few glittering gadgets such as automobiles and television sets (usually purchased on the installment plan, many at second hand) and the clothes on their backs. A horde if not a majority of Americans live in shacks, cabins, hovels, shanties, hand- me-down Victorian eyesores, rickety tenements and flaky apartment buildings--as the newspapers from time to time chortle that new Russian apartment-house construction is falling apart. (Conditions abroad, in the standard American view, are everywhere far worse than anywhere in the United States. The French, for example, could learn much about cooking from the Automat and Howard Johnson. )
At the same time, a relative handful of Americans are extravagantly endowed, like princes in the Arabian Nights tales. Their agents deafen a baffled world with a never- ceasing chant about the occult merits of private-property ownership (good for everything that ails man and thoroughly familiar to the rest of the world, not invented in the United States), and the vaulting puissance of the American owners.
It would be difficult in the 1960's for a large majority of Americans to show fewer significant possessions if the country had long labored under a grasping dictatorship. How has this process been contrived of stripping threadbare most of the populace, which once at least owned small patches of virgin land? To this fascinating if off-color question we shall give some attention later.
Statements such as the foregoing on the rare occasions when they are ventured (although strictly true and by no means new)1 are bound to be challenged by the alert propaganda watchdogs of the established order. These proprgandists, when hard pressed, offer an incantation about a mythical high American standard of living which on inspection turns out to be no more than a standard of gross consumption. The statements must, therefore--particularly in this age of burgeoning one-sided affluence-- be monumentally and precisely documented and redocumented. Not that this will deter the watchdogs, who have limitless resources of casuistry and dialectic to fall back upon as well as an endless supply of white paper from denuded forests.
Critical Scholarship Takes a Hand
But (fortunately for truth) critical scholarship, roused from its one-time somnolence by echoing charges and counter-charges over the years, has finally been led to make penetrating, detailed, exhaustive and definitive revelations of the underlying facts-- although the findings of such scholarship are not featured in the controlled prints, are not publicly discussed and are not even alluded to in polite society. As far as the broad public is concerned in an age of unrestrained publicity, when even the martyrdom of a virile young president is made overnight into a profitable industry, the facts about the skeletons in the closet of the affluent society are shrouded in secrecy for all except those queer beings willing to delve for hours among dusty tomes in library crypts.
Nonetheless, irreproachable scholarly analyses of diamond-hard official data fully support my initial assertions, which to the average newspaper reader. may seem incredibly. iconoclastic, ludicrously wrongheaded or the maunderings: of an idiot. Further along, some of the complex reasons for the odd situation will be touched upon, after the paramount position of the wealthy and the ways they are maintained have been fully depicted.
A Nation of Employees
Most adult Americans in the quasi-affluent society of today, successors to the resourceful (and wholly imaginative) Americano of Walt Whitman's lush fantasy, are nothing more than employees. For the most part they are precariously situated; nearly all of them are menials. In this particular respect Americans, though illusion-ridden, are like the Russians under Communism, except that the Russians inhabit a less technologized society and have a single employer, There are, of course, other differences (such as the fact that Americans are allowed a longer civil leash), but not of social position. And this nation of free and equal employees is the reality that underlies and surrounds the wealthy few on the great North American continent.
Those few newspapers that make a practice of printing foreign news occasionally survey Latin American countries. The writers are invariably grieved to find a small oligarchy of big landowners in control, with the remainder of the population consisting of sycophantic hangers-on and landless, poverty-stricken peasants. But I have never seen it remarked that the basic description, with the alteration of a few nouns, applies just as well to the United States, where the position of the landowners is occupied by the financiers, industrialists and big rentiers and that of the peasants by the low-paid employees (all subject to dismissal for one reason or other just like the peasants).
The Banana Republics
These same writers, focusing attention on Central America, refer caustically to the "banana republics"--those countries, economically dominated mainly by the United Fruit Company, where political leaders are bought and sold like popcorn and where ambitious insurrectos from time to time overthrow earlier insurrectos who run the government for their own profit. But the United States, sacred land of Washington, Jefferson, Franklin and Madison--"Of thee I sing"--itself often displays many similar aspects, mingled with a heady atmosphere at times reminiscent of rural carnivals, Oriental bazaars, raucous gambling houses and plush bordellos. If anyone thinks I exaggerate he should notice how the mingled images of Coney Island, Atlantic City, Miami Beach, Hollywood, Palm Springs, Broadway, Las Vegas and Madison Avenue often disconcertingly float into plain view at political conventions, state funerals, elections, court proceedings and congressional hearings, much to the glee of enchanted but I fear disrespectful and unconsciously alienated spectators.
Conditions in the United States, mutatis mutandis, are not nearly so different from conditions in other countries as North American natives are customarily led to suppose by imaginative editors. As in the "banana republics" we have assassinations and attempted assassinations of the chief of state at regular intervals--Lincoln, Garfield, McKinley and Kennedy shot dead; Truman and both Roosevelts the targets of would-be assassins; any number of local jefes politicos bullet-drilled. This is not to say that those differences that exist between the United States and the Central American republics may not be important. The point is that, while the differences in favor of the United States
are endlessly stressed for public edification--such as the prevalence north of the Rio Grande of indoor flush toilets, an engineering marvel long antedating television sets-- the grim similarities are seldom or never alluded to. To refer to them would be considered unpatriotic.
In the matter of domestic gunplay, for example, the United States far outdoes any of the "banana republics. " Since 1900 more than 750,000 persons have died in the United States of nonmilitary gunshot wounds inside or outside the home, and the annual death rate from gunplay is now 17,000, or about 50 per day. 2 Other forms of violence are equally prevalent; and violence in general, to the dismay of the genteel, is the staple theme in American films and television, reflecting the external society. More than one and a half million have been killed by the automobile since its vaunted introduction into the United States.
Crime to purloin a phrase, is rampant. From the Wickersham Report of 1931 down to a presidential commission in 1967, several national commissions have surveyed, recommended and wrung their hands as the tide of crime (much of which is not reported) has risen. In addition to frequently disclosed tie-ins of organized crime with local politicians, the associations of the organized underworld are openly traced up to the congressional level. 3
In ancient days the messenger who brought bad news to the king was frequently executed. Those who produce unwanted messages such as these are now generally stigmatized as "muckrakers," themselves unclean, as though an epithet disposed of the phenomenon.
Even in such a presumably distinctive Latin American feature as the intrusiveness of the military, the United States now clearly overshadows anything in this line the Latin American republics are able to show. Compared with the political power and influence of the American military today, Hohenzollern Germany (at one time designated by horrified American publicists as the acme of cold militarism in modern times) was only a one-cylinder, comic-opera affair. The Pentagon of today--its agents busy in Congress and the Executive Branch, with the politicians obviously standing in awe of the bemedaled generals, with the defense-industry corporations loaded with retired officers--could flatten an entity like Hohenzollern or Hitler Germany with a few well- placed blows. The youth, too, are freely conscripted, as though they were German peasants.
Even the presidents are beginning to feel bewildered by it all. Dwight D. Eisenhower in his presidential "farewell address" called attention to "this conjunction of an immense military establishment and a large arms industry" and warned the country to be on "guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. " He said, "The potential for the disastrous rise of misplaced power exists and will persist," and the influence of the military "is felt in every city, every state house, every office of the federal government. " With the military behind it if not over it, the federal government is assuming a dominating role in many directions, he said, "and is gravely to be regarded. "
President John F. Kennedy felt that he had been duped by the Pentagon and the CIA into acquiescing in the long-planned invasion of Cuba, which foundered at the Bay of Pigs as Kennedy back-pedaled on ordering air support; this action gained him many infuriated rightist enemies. Many partisans of President Lyndon B. Johnson assert that he was misted by military advice into the costly Vietnam involvement that cast a deepening shadow over his administration. However, some leading generals from the beginning opposed the glorious adventure.
While American generals do not formally make political decisions, they (as have generals in many other countries since 1914) do evidently proffer advice that makes certain decisions and consequences a foregone conclusion. 4 They are far from inconsequential politically.
Except that the United States has such large numbers of industrial and office workers, rather than landless peasants, it has few features to which general descriptions of Latin American society do not apply. The United States is a great deal more like Brazil and Argentina, for example, than it is like France or England (two countries upon which most Americans are inclined to look with patronizing reservation).
Even in such a distinctive United States feature as the separation of church and state there is now a strong movement, led by politicians with their eyes on the least instructed voters, for a direct supportive involvement of the state in the affairs of the church, an involvement that would presumably gain these politicians the support of the church. In this feature, then, there is a movement to make the United States even more like Latin America and less like Europe, where church and state are tending to become more and more separate in most jurisdictions.
It might almost be said that there is a growing tendency to model the United States, apart from its industrial features, upon the "banana republics," thus making it the Banana Republic par excellence.
The Statistical Setting
The setting of our story is of necessity statistical. And statistics have the merit of being succinct. I am aware, however, that many readers cannot face statistics, a fact that leads seasoned editors to advise writers to dispense with them or to hide them in the back of the book. Apparently childhood encounters with arithmetic under inferior school conditions have developed in many people (even the cultivated) a distaste for numbers, and when they see them they merely skip. But it will repay readers to study and ponder carefully the following figures.
While good studies have been made for some decades, three recent high-level inquiries have developed the picture in sharper and more exact detail than ever before. They represent a long series of analyses of the extent and concentration of American wealth that was begun by G. K. Holmes in 1893. These analyses, showing greater and greater precision with the passing years, are listed in the chapter notes. 5
The three recent studies were made, independently, by Professor Robert J. Lampman of the University of Wisconsin for the National Bureau of Economic Research, by the Survey Research Center of the University of Michigan as a continuing project in 1947, 1952, 1956, 1960 and 1963; and by the Harvard historian Gabriel Kolko as presented in his Wealth and Power in America (1962). I will touch upon these, as well as a resounding official clincher, in this order.
Running to 286 pages, containing 138 formidable tables and 37 charts (including 13 Lorenz curves) and employing the most sophisticated applicable mathematics, the Lampman study was published by Princeton University Press in 1962. 6
What Professor Lampman did was to obtain basic data from federal estate tax returns for the years 1922, 1929, 1933, 1939, 1945, 1949, 1953 and in some cases for 1954 and 1956; but he concentrated attention on 1953. Such tax returns are required by law of all decedents with estates exceeding the level of exemption, which was $50,000 for 1922- 26, $100,000 for 1926-32, $50,000 for 1932-35, $40,000 for 1935-42 and $60,000 after 1942.
With the data in hand, Professor Lampman then employed the established estate- multiplier method. This requires that one multiply the number and property of decedents in each age-sex group by the inverse of the general mortality rate for each such group. One thereby arrives at an estimate of living persons and the amount of estate in each age-sex group and in each estate size.
Professor Lampman illustrates the method as follows: "Suppose that out of a population of 1,000 men aged 40 to 50, two men died in one year with estates of $100,000 or more. Suppose further that it is known that 5 per cent of all the 1,000 men aged 40 to 50 died in that year. Then it may be assumed that the two men who died with $100,000 were 5 per cent of all the living men in the group with $100,000. Hence, to estimate the number of living men with $100,000, we should multiply two by twenty (the inverse of 5 per cent) to get the answer of forty living men with $100,000 or more. "7
The Lampman Findings
What Lampman found was as follows:
1. More than 30 per cent of the assets and equities of the personal sector of the economy (about 20 per cent of all wealth in the country being government-owned) in 1953 was held by 1. 6 per cent of the adult population of 103 million. 8
2. This group of 1. 6 per cent owned 32 per cent of all privately owned wealth, consisting of 82. 2 per cent of all stock, 100 per cent of state and local (tax-exempt) bonds, 38. 2 per cent of federal bonds, 88. 5 per cent of other bonds, 29. 1 per cent of the cash, 36. 2 per cent of mortgages and notes, 13. 3 per cent of life insurance reserves, 5. 9 per cent of pension and retirement funds, 18. 2 per cent of miscellaneous property, 16. 1 per cent of real estate and 22. 1 per cent of all debts and mortgages. 9
3. The following table shows the percentage of national wealth-holdings for the top 1/2 of 1 per cent and 1 per cent for the indicated years. 10
1/2 of 1 Per Cent
of Adult Population
(per cent)
1922 29. 8
1929 32. 4
1933 25. 2
1939 28. 0
1945 20. 9
1949 19. 3
1953 22. 7
1954 22. 5
1956 25. 0
1 Per Cent
of Adult Population
(per cent)
31. 6
36. 3
28. 3
30. 6
23. 3
20. 8
24. 2
. . . .
26.
9 per cent of pension and retirement funds, 18. 2 per cent of miscellaneous property, 16. 1 per cent of real estate and 22. 1 per cent of all debts and mortgages. 9
3. The following table shows the percentage of national wealth-holdings for the top 1/2 of 1 per cent and 1 per cent for the indicated years. 10
1/2 of 1 Per Cent
of Adult Population
(per cent)
1922 29. 8
1929 32. 4
1933 25. 2
1939 28. 0
1945 20. 9
1949 19. 3
1953 22. 7
1954 22. 5
1956 25. 0
1 Per Cent
of Adult Population
(per cent)
31. 6
36. 3
28. 3
30. 6
23. 3
20. 8
24. 2
. . . .
26. 0
4. The estimated gross estate size for the total adult population in 1953, obtained by extension of the same methods, was as follows:11
Gross Estate Number of
Size (dollars) Persons Aged
Average
Estate Size
(dollars)
Total Gross
Estate
(billion
dollars) Percentage
20 and Over
(millions) Percentage
0 to 3,500 51. 70 50. 0 1,800 93. 1 8. 3
3,500-10,000 19. 00 18. 4 6,000 114. 0 10. 2
10,000-20,000 21. 89 21. 2 15,000 328. 4 29. 3
20,000-30,000 6. 00 5. 8 25,000 150. 0 13. 4
30,000-40,000 2. 00 1. 9
40,000-50,000 0. 80 0. 8
50,000-60,000 0. 35 0. 3
All under 101. 74 98. 4
60,000
60,000-70,000 0. 18 0. 1
over 60,000 1. 66 1. 6
All estate 103. 40 100. 0
sizes
Median estate size
35,000
45,000
55,000
7,900
61,000
186,265
10,800
3,500
70. 0 6. 3
36. 0 3. 2
19. 3 1. 7
810. 8 72. 4
10. 5 0. 9
309. 2 27. 6
1,120. 0 100. 0
In this table is found one verification of my initial paragraph. It shows that 50 per cent of the people, owning 8. 3 per cent of the wealth, had an average estate of $1,800-- enough to cover furniture, clothes, a television set and perhaps a run-down car. Most of these had less; many had nothing at all. Another group of 18. 4 per cent, adding up to 68. 4 per cent of the population, was worth $6,000 on the average, which would probably largely represent participation in life insurance or emergency money in the bank. Perhaps this percentage included some of the select company of "people's capitalists" who owned two or three shares of AT&T.
Another 21. 89 per cent of adults, bringing into view 92. 59 per cent of the population, had $15,000 average gross estates--just enough to cover a serious personal illness. This same 92-plus per cent of the population all together owned only 47. 8 per cent of all assets.
Top Wealth-Holders
The number of persons in the top 1 per cent of wealth-holders through the decades was as follows:12
Years Number of Persons
(thousands)
1922 651
1929 744
1939 855
1945 929
1949 980
1953 1,030
Percentage Share
of Gross Estates
32
38
33
26
22
25
But the top 11 per cent of persons in the magic 1 per cent (or 0. 11 per cent) held about 45 per cent of the wealth of this particular group while the lower half (or 0. 50 per cent) held only 23 per cent. 13
Says Lampman: "The personally owned wealth of the total population in 1953 amounted to about $1 trillion. This means that the average gross estate for all 103 million adults was slightly less than $10,000, The median would, of course, be considerably lower. In contrast the top wealth-holder group had an average gross estate of $182,000. The majority of this top group was clustered in estate sizes below that average. Of the 1. 6 million top wealth-holders, over half had less than $125,000 of gross estate and less than 2 per cent (27,000 persons) had more than $1 million. "14
There were, then, in excess of 27,000 millionaires in the country in 1953--not only the greatest such aggregation at one time in the history of the world but a number greater than the aggregation throughout all of history before 1875 (as of 1966, millionaires numbered about 90,000). If consumer prices had remained stable from 1944 to 1953 there would have been fewer. "In 1944 there were 13,297 millionaires," says Lampman. "In 1953 there were 27,502 millionaires in 1953 prices, but only 17,611 in 1944 prices. "15
What of the 1965-67 year-span? As the prices of stocks advanced tremendously in the preceding dozen years, one can only conclude that the proportion of wealth of the top wealth-holders also advanced impressively. For this small group, as we have seen, owns more than 80 per cent of stocks. The Dow-Jones average of 65 industrial stocks stood at 216. 31 at the end of 1950; at 442. 72 in 1955; at 618. 04 in 1960; and at 812. 18 in March, 1964. As of May, 1965, it was well above 900. The less volatile Securities and Exchange Commission index of 300 stocks shows the same quadrupling in value, standing at 41. 4 in 1950; 81. 8 in 1955; 113. 9 in 1960; and 160. 9 in March, 1964. How many employees have experienced a fourfold increase in salaries in the same period?
The rise in value of stocks, however, surely invalidates one of Lampman's speculations, to this effect: "Our finding that the share of wealth held by the top 2 per cent of families fell from about 33 to 29 per cent from 1922 to 1953, or about one- eighth, would seem compatible with . . . the general belief that there has been some lessening of economic inequality in the United States in recent decades. "16 The more recent rise in stock prices and in corporation earnings shatters even that slight concession.
Professor A. A. Berle, Jr. , has rushed forward to hail the Lampman showing that the upper 1 per cent saw its participation reduced from 32 per cent of all wealth in 1922 to 25 per cent in 1953; but his celebration was premature and he did not fully report Lampman, who indicated that the participation had been reduced from 1922 to 1949 but thereafter was again increasing. 17
The Lampman findings were extended to 1958 in an extremely sophisticated statistical critique presented in 1965 to the American Statistical Association by James D. Smith and Staunton K. Calvert of the Statistics Division of the Internal Revenue Service. 18
After reviewing Lampman, revising him in a minor particular, Smith and Calvert conclude that "top wealth-holders owned 27. 4 percent of gross and 28. 3 percent of net prime wealth in 1953, but increased their share to 30. 2 and 32. 0 percent respectively by 1958. These data support Lampman's conclusion that the share of top wealth-holders has been increasing since 1949. " Prime wealth, as they explain, is total wealth less the value of assets in trust funds and pension reserves.
This is where the question rests on the basis of the most recent data supplied by leading authorities in the field: Concentration of wealth in a few hands is intensifying.
Actually, in view of market valuations, the share of top wealth-holders at this writing is easily the greatest in history. It is my hypothesis that the share of the top 1/2 of 1 per cent now exceeds the 32. 4 per cent of this group for 1929. Later studies should show that the proportions for all groups of top wealth-holders studied by Lampman have been significantly exceeded. So much for Lampman although there is much else in his razor'- sharp book that merits attention. 19
The University of Michigan Study
Although showing some minor variations, the continuing University of Michigan survey dovetails with the Lampman study and fully supports it.
First, it was found that 3 per cent of spending units in 1953 had $60,000 or more total assets; this compares with 2. 3 per cent of individuals in the Lampman study. A "spending unit" consisted of any one or more persons established as a household.
According to this University of Michigan "Survey of Consumer Finances," the upper 11 per cent of the nation's 54 million spending units held 56 per cent of the total assets and 60 per cent of the net worth of all private holdings in the country. "While this group held only 30 per cent of consumer capital," Lampman comments (p. 195), they held 80 per cent of business and investment assets. " 20
According to the 1960 University of Michigan "Survey of Consumer Finances," 86 per cent of all spending units in the country owned no stock whatever. Of incomes under $3,000, 95 per cent owned no stock; of incomes of $3,000-$5,000, 93 per cent owned no stock; and of incomes of $5,000-$7,500, 87 per cent owned no stock. The class of $7,500-$10,000 incomes was 78 per cent without stock ownership, while even in the $10,000-$15,000 income class 61 per cent owned no stock. In 1963 a total of 83 per cent owned no stock. Stock ownership, it is clear, was being somewhat more widely diffused as long-term holders gradually unloaded at rising prices. Whereas in 1953 only 44 per cent of the income class above $15,000 owned no stock, in 1960 this same broad class included only 26 per cent without stock ownership. 21
For some years the New York Stock Exchange and the Advertising Council, as part of a campaign to show that a "people's capitalism" exists with a widely diffused ownership in American industry, have been busily pyramiding figures. These computations show that in 1956 there were 8,630,000 American shareholders, and in 1962 there were 17,010,000. 22 The figure more recently being cited is 20 million . 23
Even though the method of their compilation is challenged by statisticians, these computations could all be true and still not after the implications of the Lampman analysis and University of Michigan surveys. For if 17 per cent of spending units owned stock in 1963, as the University of Michigan survey indicates, that would be well over 17 million persons. And anyone would qualify as a stockholder if he owned only one share worth 10 cents.
That most stockholders own trivial amounts of stock is shown by the University of Michigan figures for 1963. The 17 per cent of spending units holding stock broke down in this way: 3 per cent held less than $500 worth; 2 per cent held $500 to $999 worth; 4 per cent held $1,000 to $4,999 worth; and 2 per cent held $5,000 to $9,999 worth. As far as stock ownership goes, these are all insignificant figures. Yet they make up 75 per cent of the households holding stock. Only 4 per cent of all spending units owned more than $10,000 of stock. 24 But most of this group, exceeding four million people, also owned little stock; for we are already aware that a group consisting of 1. 6 per cent of the population owns more than 80 per cent of all stock, 100 per cent of state and local government bonds and 88. 5 per cent of corporate bonds. Less than 20 per cent of all stock in 1963, then, was owned by some 15. 4 million people.
Throughout this study, therefore, it is going to be taken as fully established that 1. 6 per cent of the adult population own at least 32 per cent of all assets, and nearly all the investment assets, and that 11 per cent of households (following the University of Michigan study) own at least 56 per cent of the assets and 60 per cent of the net worth. It is even possible, as we have seen, that 1/2 of 1 per cent own more than one-third of all productive assets as of 1965-67. It is evident that this leaves very little to be apportioned among 90 per cent of the population. It will be recalled that Lampman showed 50 per
cent owning virtually nothing, with an average estate size of only $1,800 as of 1953. This same study, according to my tabulation numbered 4, showed that 89. 6 per cent of the adult population had available to it only 47. 8 per cent of the assets, while 50 per cent had only 8. 3 per cent. The University of Michigan figures and the Lampman figures, in short, coincide rather closely although developed by different methods.
Supporting Studies
Every other serious study supports these findings. The Senate Temporary National Economic Committee (TNEC) just before World War II inquired into the distribution of stock among 8. 5 million shareholders in 1,710 major companies as of 1937-39 and found that 4 per cent of all common stockholders held 74. 9 per cent of the stock, and 4. 5 per cent of the preferred stockholders held 54. 8 per cent. 25 Looking into the same situation as of 1951, the Brookings Institution of Washington, D. C. , found that in 2,991 major corporations only 2. 1 per cent of the holders owned 58 per cent of the common stock and 1. 1 per cent of the holders owned 46 per cent of the preferred stock. Two- thirds of all common stockholders owned only 10 per cent of the shares. 26 Harvard's J. Keith Butters estimated that in 1949 the spending units (households) that owned $100,000 or more in marketable stock, comprising 1 /5 of 1 per cent of all spending units and 2 per cent of stockholders owned between 65 and 71 per cent of all marketable stock held by individuals. 27 None of these studies took into account the beneficial interest of individuals in stock held by institutions for the account of individuals, which swells the percentages proportionately.
The Lampman estate studies do not necessarily reveal the sizes of fortunes. 'This is because many of the fortunes are systematically distributed during the lifetime of the owner, mainly for the benefit of heirs. At the time of death the fortune is reduced.
Again, in extrapolating from the estates to the rest of the population, at least two distortions are discernible. First, only adults are considered by Lampman, whereas a considerable number of children are millionaires owing to having had trust funds settled upon them. Second, the economic position of age groups is not strictly comparable between the affluent and the poor because of an average earlier death rate for the latter.
But, on the whole, the Lampman study came closer than anyone had yet come to showing the asset position of all adult age-sex groups.
Definitive Data from the Federal Reserve
Strongly persuasive though all these studies are, it is possible to be definitive about the distribution of wealth in the United States, on the basis of findings put forth recently under the highest official auspices.
In a complex and comprehensive study prepared for the Board of Governors of the Federal Reserve System on the basis of Census Bureau data under the title Survey of Financial Characteristics of Consumers, the cold figures are officially presented on asset holdings as of December 31, 1962, removing the entire subject from the realm of pettifogging debate.
