But the rather well-populated group that Lampman calls top wealth-holders also certainly
contains
many blanks as far as big wealth is concerned.
Lundberg - The-Rich-and-the-Super-Rich-by-Ferdinand-Lundberg
0
Zero 4. 7
$1-$999 9. 0
$1,000-$4,999 10. 8
$5,000-$9,999 9. 1
$10,000-$24,999 13. 3
$25,000-$49,999 6. 2
$50,000-$99,999 2. 5
$100,000-$199,999 . 7
$200,000-$499,999 . 5
$500,000 and up . 2
In stating that 200,000 households held 22 per cent of the wealth there is some danger of suggesting that the power of these 200,000 is less than it actually is. The nature of the wealth held is of determining importance here. in general, the lower wealth-holders mostly own inert assets such as automobiles, small amounts of cash and some residential equity, while the upper wealth-holders mostly own corporate equities in an aggregate amount sufficient to show that they are in full control of the productive side of the economic system.
Households in the number of 200,000 worth $500,000 and more held 32 per cent of all investment assets and 75 per cent of miscellaneous assets, largely trust funds, while 500,000 worth $200,000 to $499,999 held 22 per cent of investment assets. The 700,000 households worth $100,000 to $199,999 held 11 per cent of investment assets. 31
Center of Economic Political Control
We see, then, that 1. 4 million households owned 65 per cent of investment assets, which are what give economic control. Automobile and home ownership and bank deposits do not give such control. The economic power of the upper 200,000 is greater than indicated by their ownership of 22 per cent ,of all assets; it amounts to 32 per cent of investment assets.
Experts concede that a 5 per cent ownership stake in a large corporation is sufficient in most cases to give corporate control. It is my contention that general corporate control lies in this group of 200,000 very probably and almost certainly lies in the combined group of 700,000 wealthiest households, slightly more than 1 per cent, owning assets worth $200,000 and more.
There is a danger here, as the erudite will recognize, of perpetrating the logical fallacy of division--that is, arguing that what is true of a whole is true of its individual parts. That argument here would be that because 200,000 households own 32 per cent of investment assets they each hold a stake of exactly 32 per cent in the corporate system. I do not make such a ridiculous argument. First, this upper group concentrates its holdings for the most part in leading corporations, bypassing the million or so papertiger corporations of little or no value. Again, as just noted, far less than 32 per
cent of ownership in any individual corporation is required to control it. Control, as we shall see, is the relevant factor where power is concerned. Usually comparatively little ownership is necessary to confer complete corporate control which, in turn, extends to participation in political control.
A man whose entire worth lies in 5 per cent of the capital stock of a corporation capitalized at $2 billion is worth only $100 million. But as this 5 per cent--and many own more than 5 per cent--usually gives him control of the corporation, his actual operative power is of the order of $2 billion. Politically his is a large voice, not only because of campaign contributions he may make but by reason of all the legislative law firms, congressional and state-legislative, under retainer by his corporation; for every national corporation has law firms in every state. There is additionally to be reckoned with all the advertising his corporation has to dispense among the mass media as a tax- free cost item, the lobbyists his corporation puts into the field and the cultural-charitable foundations both he and the corporation maintain.
Such a man, worth only $100 million net, is clearly a shadowy power in the land, his ownership stake vastly multiplied by what he controls--other people's property as well as his own. And there are more than a few such.
On the other hand, many intelligent citizens today complain in the face of the alleged complexity of affairs of feelings of powerlessness. Their feelings are justified. For they are in fact politically powerless.
The actual power of such concentrated ownership, therefore, is much greater than its proportion in the total of investment assets. The corporate power of the top 200,000, and certainly of the top 700,000, is actually 100 per cent. The power of this top layer corporatively would be no greater if it owned 100 per cent of investment assets. Actually, it might be less: It would then receive no support from many tremulous small holders but would probably find them in political opposition.
As to distribution of investment assets among smaller property holders, 1 per cent are owned by the $5,000 to $9,999 group, 7 per cent by the $10,000 to $24,999 group, 11 per cent by the $25,000 to $49,999 group and 15 per cent by the $50,000 to $99,999 group, or 34 per cent in all. In this group of comparatively modest means one finds some of the most voluble supporters of the established corporate way. Within their own terms they are all winners, certainly hold some financial edge. Most of them, as their expressions at stockholder meetings show, greatly admire the larger stockholders. In their eyes, a divinity doth hedge the large stockholders.
Net Worth in the Populace
Approached in terms of net worth (assets less debt) the situation of the lower populace is more unfavorable, as shown in the following table. 32
Net Worth
Negative (deficit)
Zero
$1-$999
$1,000-$4,999
$5,000-$9,999
$10,000-$24,999
$25,000-$49,999
$50,000-$99,999
$100,000-$199,999
Percentage of
Consumer Units
11
5
12
17
15
23
10
4
1
$200,000-$499,999
$500,000-$999,999
$1,000,000 and more
1
Less than 1/2 of 1 per cent
Less than 1/2 of 1 per cent
As this table shows, 28 per cent of the households had a net worth of less than $1,000; the 11 per cent with a deficit, on balance in debt in varying amounts, greatly exceeded the percentage of those worth $50,000 and more. The less than 1/10th of 1 per cent who were millionaires (from time to time pointed to with pride by Time, Fortune and the Wall Street Journal) were offset by 11 per cent of households worth less than zero. Add the zerogroup and one obtains 16 per cent of all households. Forty-five per cent of all households had a net worth of less than $5,000. Is this affluence?
The View from the Bottom
A sensitive statistical analysis meriting the closest attention by all students of the distribution of wealth is that of Harvard's Dr. Gabriel Kolko, Wealth and Power in America. Not only does he develop essentially the same perspective as Lampman and the University of Michigan--"Since World War II, one-tenth of the nation has owned an average of two-thirds of liquid assets" (p. 49)--but he attacks the problem from below. He has no difficulty in showing, on the basis of official figures that, as of affluent 1957, 44 per cent of the spending units (households) lived below the maintenance level set by U. S. Bureau of Labor Statistics budgets, and that 27. 5 per cent lived below the emergency level. 33 These figures represent a slight improvement over 1947, when the figures were 51. 2 per cent and 27. 5 per cent.
Dr. Kolko approaches the problem via income from all sources, employment as well as assets. As he shows, using Bureau of Census and University of Michigan figures, the distribution of income in the United States is fantastically lopsided. Whereas the lowest tenth of the population in all years from 1947 through 1955 received only 1 per cent of national personal income after federal taxes, the upper tenth in the same years received from 27 to 31 per cent. The second from the lowest income-tenth received 3 per cent of income from 1947 through 1955 except for the years 1953 and 1954, when it received 4 per cent. The third from the bottom income-tenth received 5 per cent throughout these years.
For 1947-55, in other words, the three lowest income-tenths, or 30 per cent of recipients, received 9 per cent of national income after taxes compared with a varying 56-58 per cent for the three upper income-tenths. 34 These figures: spell poverty in all starkness--particularly in view of the greater concentration of children on the lower and poorly guided levels. Oddly, the prospect does not improve very much as one ascends until one gets to the very top. For the fourth income-tenth from the bottom received only 6 per cent of income, and the fifth income-tenth received only 8 per cent. It is not until the sixth tenth from the bottom that one finds 10 per cent Of the receivers obtaining 10 percent of the income, balanced distribution. The next highest got 11 per cent, the next received 13 per cent and the next to the top got 16 per cent.
But if the top income-tenth, which received 27 per cent of income in 1955, were to be broken down into 1 per cent groups, we would find, as established by Lampman, that the top 1 per cent got the lion's share. For the higher one ascends, the fewer the number of persons involved, the greater the percentages of participation in economic advantages. Again let me remind readers, these incomes are from employment as well as from assets. It is the asset-derived income that is the most desirable, involving little or no strain on one's time or energy. With that kind of income one is not chained to a
job, often ungratifying in itself. With asset-income one can choose one's line of endeavor or choose to be completely idle while others work.
Inadequate Counter-Measures
Not only is poverty in the United States very deep and widespread, Dr. Kolko clearly shows, but the various New Deal measures devised to mitigate it-Social Security, unemployment insurance, disability relief, minimum wage laws and the like-are quite inadequate in their coverage. There is no such thing, as newspapers repeatedly insist, as an embryonic Welfare State in the United States. This is evident in the fact that the average monthly oldage insurance payment in 1963 was $77. 03, or $924. 36 per year.
As to savings by each income-tenth, the lowest income-tenth has long lived on a deficit, From 1929 to 1950 this deficit varied from 2 to 35 per cent, standing at 16 per cent in 1950. Not only does this group not own anything but it is deeply in debt. The lower 50 per cent of income receivers in 1950 had a net savings deficit of nearly 18. 5 per cent; the sixth income-tenth from the bottom had only 4 per cent of net national savings, with the figures rising thereafter by income-tenths from 10 to 11 to 20 and to 72 per cent for the top tenth. During the depression years of 1935-36, the net savings of the top income-tenth amounted to 105 per cent, of the next income-tenth 13 per cent, of the next income-tenth 6 per cent and of the fourth income-tenth 2 per cent-adding up to 126 per cent. But 60 per cent of the lower income receivers incurred debt of 25 per cent as an offset. 35 In this numbers game much of what one saves another owes.
To all this some hardy souls respond by saying, "Well, that's the way the ball bounces, that's the way the cookie crumbles. " In other words, all this is the consequence of the inevitable interplay of chance factors in which some persons are the lucky winners or the more intelligent players.
Planned Consequences
But actually the results at both the top and the bottom are contrived. They are the outcome of pertinacious planning. For example, it is known on the basis of other careful studies that the lower income levels are disproportionately populated by Negroes and poor southern whites. They don't account for all of the lowly by any means; but they do account for very many. And the economic plight of both the Negroes and the southern whites is the consequence of a longstanding political power play. Southern Democratic Party gravy-train politicians after the Civil War, seeing a popular local issue in "restoring slavery in all but the name," 36 asked for and received northern Republican acquiescence that would insure personally lucrative Democratic one-party dictatorial rule in the South. In return they agreed to deliver unbroken congressional support to the Republicans in blocking the rising national clamor, mainly from organized labor, for needed social legislation. For nearly a hundred years the scheme has worked perfectly, and the politically confused southern white in holding the Negro down, culturally and economically, has kept himself down to the same level. The scheme has had wider effects, as it has enabled the wealthy backbone of the Republican Party to keep a good portion of the rest of the country deprived, particularly of needed educational and social measures. The social role of the Republican Party ever since the death of Lincoln has been delay and obstruction, even though off and on there have emerged responsible, forward-looking Republicans.
This isn't to say that the foregoing paragraph accounts for the existence of deep and widespread poverty in the midst of fabulous wealth, but it accounts for some of it.
The Mild War on Poverty
President Lyndon B. Johnson in 1964 startled average newspaper readers by suddenly announcing, out of a seemingly cloudless sky, his "war on poverty. " This was widely interpreted, cynically, as a pure vote-getting ruse, of no intrinsic merit. For was it not a fact, as newspapers vowed, that there was no genuine poverty in the prosperous, high- living United States? But since then, as a result of official speeches and the passage of an initial anti-poverty measure exceeding $1 billion, the country has been gradually introduced to the strange, even subversive, notion that poverty is prevalent in the United States.
The argument has now shifted, as it is always bound to in the nimble hands of the dialecticians, to what precisely constitutes poverty. Sargent Shriver, director of the Office of Economic Opportunity and former President John F. Kennedy's brother-in- law, suggested that a family of four with a yearly annual income under $3,000 and an individual with an income under $1,500 be classified as poor, which would put more than 30 per cent of all families in the poverty-stricken category according to University of Michigan figures. For the University of Michigan Survey of Consumer Finances showed for 1962 that, while the figures of the lowest tenth of all spending units (households) were not then available, the figure for the next to the lowest tenth was $1,510 for each household; and for the third from the lowest tenth it was $2,510. For the fourth tenth from the bottom it was only $3,350. 37 Mr. Shriver subsequently raised his figures to $3,130 and $1,540.
The United States Chamber of Commerce predictably challenged Mr. Shriver's first gauge of poverty as too high. "The Chamber of Commerce based its criticism of the old gauge," said the New York Times, "on the fact that a small family living in a warm climate and growing most of its own food could live comfortably on $3,000 a year. "38 As the patient could rest easily on this amount of income, why introduce him to luxuries--such as medicine?
Mr. Shriver, himself a wealthy man, more recently indicated that 35 million American families are "poverty-stricken," untouched by existing programs for assisting the poor. 39 If one assigns only 3 persons to a poor family, many of which have many more, one obtains 105 million persons out of a population of 180-plus million.
Rather obtusely the Chamber of Commerce people did not recognize that the Administration, in dealing with a serious situation (for whatever motives, humanitarian or self-serving) had produced a deceptive new official yardstick for measuring poverty: income. Down through history poverty has always referred to lack of property. The man who had no property was defined as poor; the more property a man owned the less poor he was. Most people in the United States own little more property than do Russian peasants, and by that standard they are poor.
By the Shriver standard, if a family had income from uncertain employment of twice $3,130 a year it would not be poor. While many Americans by the Shriver standard are poor, most are not--even though they own nothing worth speaking of. But the Shriver standard makes it appear that most people are well off, which is hardly true.
Poverty Defined
For my part, I would say that anyone who does not own a fairly substantial amount of income-producing property or does not receive an earned income sufficiently large to make substantial regular savings or does not hold a well-paid securely tenured job is poor. He may be healthy, handsome and a delight to his friends--but he is poor. By this standard at least 70 per cent of Americans are certainly poor, although not all of these by any means are destitute or poverty-stricken. But, as was shown in the 1930's, Americans can become destitute overnight if deprived of their jobs, a strong support to mindless conformity. As a matter of fact, many persons in rather well-paid jobs, even executives, from time to time find themselves jobless owing to job discontinuance by reason of mergers, technical innovation or plant removal. Unable to get new jobs, they suddenly discover, to their amazement, that they are really poor, and they also discover by harsh experience to what specific conditions the word "poverty" refers. And even many of those who never lose their jobs often discover in medical and similar emergencies that they are as helpless as wandering beggars. They are, in fact, poor. In such eventualities the man of property is evidently in a different position. He is definitely not poor. And this is all I say.
Conditions in England and India
The United States, in the short period since the public lands were distributed to the people, often through the intermediation of profit-skimming railroads, has rather quickly been brought close to the position of older countries such as England. In 1911- 13 the small fraction of 0. 63 per cent of persons over age 25 in England owned 57 per cent of all capital, compared with 1. 84 per cent of such persons owning 51. 92 per cent of capital in 1946-47. In 1911-13 1. 53 per cent owned 66. 9 per cent of capital compared with 4. 56 per cent owning 63. 27 per cent of capital in 1946-47. 40 Observers see a slight tendency to equalization in these figures.
But in superstition-ridden India about 1 per cent of the population gets half of all income. 41
Apart from the differences in the proportions, a difference between the United States on the one hand and England and India on the other is that in the latter there is a much longer history behind each condition. In the United States it is recent.
Some Preliminary Conclusions
It should be evident in studying the Lampman and Federal Reserve figures on estates that the United States now has a well-established hereditary propertied class such as exists in Europe, which Americans have long looked upon disdainfully as the stronghold of class privilege. Great wealth in the United States, in other words, is no longer ordinarily gained by the input of some effort, legal or illegal, useful or mischievous, but comes from being named an heir. Almost every single wealth-holder of the upper half of 1 per cent arrived by this route.
Lampman's figures clearly indicate this. He noted that 40 per cent of the top wealth- holders are women. Now, while some women have garnered big money by their own efforts--Mary Pickford, Greta Garbo, Helena Rubinstein and a sprinkling of others in the world of entertainment and fashion--few women have been even modest fortune builders. Women simply do not occupy the money-making positions in finance, industry and politics. But they have been heirs.
It is true that estate splitting between husband and wife is increasingly resorted to in order to take advantage of tax provisos. But this works both ways. Women can split estates with men just as men can with women. And on the upper level of wealth it is usually wealthy people who marry each other. Otherwise it is front-page news. Even if it is contended that not so many as 40 per cent of the men are in the picture because of estate splitting, the men are, as heirs, prominent among the wealthy for another reason. Many men, having inherited a smaller estate, have expanded their wealth through shrewd operations. J. Paul Getty, whom certain English newspapers insistently refer to as "the richest man in the world," inherited $7 million from his father many years ago, thus placing him well in the millionaire class. He has through operations in the oil business gone well beyond this level. Nevertheless he is not "self made. " There are more than a few Gettys among the top wealth-holders.
It can therefore be concluded that at least 40 per cent of the men, or 24 per cent of all the top wealth-holders, are heirs, bringing to more than 60 per cent the hereditary proportion. I believe, on other grounds, that the proportion of male heirs in the group is much larger. Women, owing to their inexperience with financial affairs, are generally poor estate managers, Hetty Green notwithstanding. They are more easily victimized by specious schemes, fail to take advantage of obvious opportunities, and so tend to drop out of the group and to be under-represented. Men are usually financially more capable and their greater staying power entitles them statistically to a larger representation among the heirs than women. More conclusively, it is directly observable among the super-rich that the possessors--men or women--are simply heirs. They got there by listening to a will being read, not by schemes that fill some observers with unaccountable transports of delight, that others consider unspeakably ignoble. There are few newcomers, as we shall see in the next chapter.
Although a man who amassed his own money would figure only once among the propertied, some who are heirs are heirs many times over, having inherited from many testators. This has taken place on the upper, intermediate and lower levels of wealth. And this occasional process leads to further concentration.
The federal estate-tax statistics since 1916 show that an avalanche of wealth has been transferred over fifty years by testamentary bequest. Individuals inherited in nearly every case. Whatever the presence of rags-to-riches moneymakers in the past the acquisitors now are largely gone. The inheritors are in possession.
Extended Family Groups
Lampman's figures relate to individuals. They do not show that most of the people in the upper 1/2 of 1 per cent that now probably own at least 33 per cent (by value) of all assets are members of extended family groups. There are more than 1,600 Du Ponts, not all individually in the upper circle. There are sizable clusters of Rockefellers, Vanderbilts, Whitneys, Mellons, Woolworths, Fishers, Phippses, Hartfords and others. Through distaff marriages part of the big fortunes are concealed behind offbeat names, such as Cecil (Vanderbilt). The well-groomed heirs or their representatives often sit together amicably on the same boards of directors. Most belong to the same metropolitan clubs.
But the rather well-populated group that Lampman calls top wealth-holders also certainly contains many blanks as far as big wealth is concerned. It will be recalled he stressed that more than half of his top group had no more than $125,000 of assets--a paltry sum, even though in thousands of neighborhoods around the country a man with such wealth would be looked upon as a Croesus.
Owing to intermarriage among the wealthy, property holdings tend to concentrate in fewer and fewer hands. For the propertied, not without sound reason, often suspect the marital motivations of the nonpropertied. 42
These processes cannot help but concentrate wealth and make the scope of new estate builders less ample. There is less and less room at the top for new moneymakers. Although there are new successful enterprises, they are all comparatively small. Some are absorbed by the bigger enterprises on advantageous terms. None shows the slightest sign of becoming another Ford Motor Company. All the big bets seem to be down. Rien n'a va plus.
Apologists on the Defensive
But this panorama of contemporary private wealth and power throws some doubt on the doctrines of earlier apologists for the big fortunes. It was once widely preached from pulpits as well as editorial pages that great wealth was either the reward for social service (such as graciously building a vast industry to cater to an undeserving public) or it represented the inevitable, natural and wholly acceptable outcome of an evolutionary struggle in which the fittest survived and the unfit landed in the gutter. On the basis of this doctrine the present top wealth-holders are the offspring of public benefactors and the fittest of a past generation. Fortunately, they are not themselves facing the same tests of fitness.
It was also once often said that, if all money were equally divided among all the people, in less than a generation it would be back in the same hands. While this may have been true when the original fortune-builders were alive, it is hardly true any longer, when the heirs would have to contend with gentry like Mr. James J. Hoffa and Mr. Frank Costello. In a struggle waged outside the Marquis of Queensberry rules (which is where the fortune-builders operated) most of the present wealth-holders, many of them personally attractive, would hardly be voted most likely to succeed. Could they make much headway against Jake Guzik and Tony Accardo? Al Capone and Machine- Gun Jack McGurn?
Down through the years all the estates have been subject to taxation--federal and sometimes state--but to much less than is commonly supposed, as we shall see. There is no process of estate destruction taking place in the United States through taxation, as is commonly suggested by propagandists of the Establishment. And few estates, unless there are no heirs, pass to institutions. But many estates pass indirectly as well as directly to heirs through various arrangements such as delayed-action trust funds, endowments and foundations. The indirectly conveyed portions are operated by the heirs for their own beneficial interest.
The Fortress of Interlaced Wealth
What has developed, then, under the operation of inheritance laws handed down from days when property ownership was far more modest to a day when vast properties have been created mainly by technology, is a huge, solid fortress of interlaced wealth against which even clever new wealthseekers, try as they will, cannot make a tiny dent. About the only way one can get in (and that way isn't always rewarding) is by marriage. If a potential new Henry Ford produces an invention and sets out with friends to market it he generally finds (as did Professor Edwin H. Armstrong, inventor of wide-swing radio frequency modulation, the regenerative circuit for vacuum tubes, ultra short-wave super-regeneration and the superheterodyne circuit) that it is boldly infringed by
established companies. After he spends the better part of a lifetime in court straining to protect his rights he may win (usually he does not); but if he wins he collects only a percentage royalty. What the infringers can show they have earned through their promotional efforts they may keep, with the blessings of the courts, who are sticklers for equity: All effort must be rewarded. And then the overwrought inventor, as Professor Armstrong did in 1954, can commit suicide.
Henry Ford came up when there were only small competing companies in the field. When established companies are in the field, inventors must sell out, or suffer a fate similar to Professor Armstrong's.
The Role of the People
The inheritance laws have played a major role in the development of great fortunes. But they haven't been the only factor. A small group, unless possessed of direct dictatorial power, could not unaided have served itself so generously, even if masters of stealth. Writing about the wealthy in America's Sixty Families, page 5, I remarked: "The situation, for which the people themselves are in a great measure to blame. . . . " The public itself has facilitated and continues to facilitate the building of vast hereditary private power within the American elective system of government. This public is in many ways a self-made victim, as sociologists now regard many victims of crimes.
The contrast I have posed between concentrated wealth and widely distributed poverty may seem to suggest that I am arguing for the equalization of wealth. But though there is obviously considerable room for some equalization I shall not argue for it because there are millions of people who could not hold on to $10 for five minutes or $10,000 for five months.
If wealth were equalized, what would we have? As Lampman showed, if all asset- wealth as of 1953 were equally apportioned, there would be about $10,000 for each adult. Let us suppose that a share in this amount were held for each adult in a national trust supervised by the United States treasury. The income from each share at 5 per cent would be $500 per annum. If one adds this to the present amount of each person's earned income it would not amount to much, however welcome it would be for some in the lowest brackets.
If inequality of income is not the main question, what is?
Policy-Making Power of Wealth
First, the present concentration of wealth confers self-arrogated and defaulted political policy-making power at home and abroad in a grossly disproportionate degree on a small and not especially qualified mainly hereditary group; secondly, this group allocates vast economic resources in narrow, self-serving directions, both at home and abroad, rather than in socially and humanly needed public directions.
When, through its agents, it cannot enlist the government in support of its various plans at home and abroad it can, and does, frustrate the government in various proceedings that have full public endorsement. It involves the nation in cycles of ferocious wars that are to the interest of asset preservation and asset expansion but are contrary to the interest of the nation and the world. It can and does establish connections all over the world that covertly involve American power in all sorts of ways unknown until some last-minute denouement even to Congress and the president.
It doesn't do any of this maliciously, to be sure, any more than an elephant feels malice when it rubs against a sapling and breaks it in two. An elephant must behave like an elephant, beyond any moral stricture. And power of any kind must exert itself. Historically it has invariably exerted itself in its own self-visualized interests.
So, concentrated asset-wealth not only brings in large personal incomes, but confers on the owners and their deputies a disproportionately large voice in economic, political and cultural affairs. Thus the owners may make or frustrate public policy, at home and abroad.
Low Incomes of Vital Personnel
Managers of concentrated asset-wealth determine, among other things, how much is to be paid for various services--who is to be paid a great deal and who is to be paid very little. Some people, for the convenience purely of asset-wealth, are rewarded munificently for services of comparatively slight social importance--for example, certain leading company executives. Other persons are paid poorly for what are universally insisted to be superlatively valuable services--for example, scientists, engineers, artists and teachers. The pay of scientists in the United States in the 1960's, according to the National Science Foundation, is in the range $6,000-$15,000 per annum,43 far less than that of an astute salesman of encyclopedias or vacuum cleaners. Referring to "starvation wages," Paul Woodring, educational consultant to the Fund for the Advancement of Education of the Ford Foundation, said: "There are dozens of liberal arts colleges which pay average salaries as low as $3,000 per year and minimum salaries much lower still. " 44 If it is said that such compensation has more recently been increased (which isn't generally true), one may still ask: Is it anywhere near the astronomical level of executive salaries?
Of salaries of scientists and teachers, a company director would say: "What have we to do with those? They aren't in our jurisdiction. The executive salaries, I admit, are. "
My response to this is: When the leading cadres of wealth want to be the government, as we shall see, they are the government. When they don't want to be, when there is some delicate problem to be solved, they say, "Go to Washington about that. It's out of our jurisdiction. " But even in Washington they have many friends who believe that teachers and scientists should not be spoiled by being paid ample wages.
Marxism and the Workers
Marxists hold that it is the workers-factory workers--who are 'being deprived to insure profits for the rich. And this may be so to some extent in some times and places, and at one time it was so universally in the United States. But the workers would not likely be paid more and would probably be paid less than they are now in thoroughly unionized industries: under such so-called Marxist regimes as we have yet seen.
In some instances, owing to organization and the balance of external forces, some categories of unionized workers in the United States today are probably disproportionately rewarded, are paid more than many trained scientists. Their leaders have simply seized opportunities to exert leverage in the power structure, threatening to disrupt production.
Lest I leave a misleading impression of American workers, it must be said that the position of the unorganized and unskilled is very bleak, in the depths of poverty. So- called white collar workers are also poorly paid. Since World War II the custom has
spread among low-paid skilled people, particularly teachers, of working at two jobs, a practice known as "moonlighting. " Police and firemen, too, participate in the practice, and so do even skilled factory operatives who wish to keep above the poverty level. At a time when many sociologists discourse fervidly about a coming thirty-hour week and assert increasing leisure to be a basic human problem, many moonlighters work sixty and seventy hours a week, hardly a step forward from the nineteenth century twelve- hour day. The moonlighters drive taxis, tend bar, act as property guards, work in stores, etc.
But if the workers in general are indeed deprived for the sake of profits they wouldn't be benefited much directly by an egalitarian distribution of assets, nor would anyone else. For it isn't the factor of ownership of assets in itself that is crucial. It is the factor of general control that concentrated ownership confers that needs to be understood. Owing to the strength given them by their concentrated and combined assets, the big owners and their paid managers have a major if not always decisive voice in running the economic system, in backing the political parties and their candidates and in influencing if not determining national policies from the highest to the lowest. The ownership titles, reinforced many times over from the vantage point of banks and insurance companies, are what constitute the ticket of admission. The amount of ownership at the top of the pyramid necessary to insure such control for any group may be only 5 per cent. Scattered smaller owners, if there are any, cannot gather enough stock to overcome the leading blocks and would not know what to do if they could.
The Radiation of Control
This control at one or a few points radiates through all of industry, with a few central groups participating in a cooperative manner. The industrial control (to be shown later) gives command over vast resources, some of which are used to influence political parties and candidates, newspapers and other publications. A tacit, uncriticized scheme of values is put into action and is absorbed by many people far from the scene. The point to be raised is this: Is this scheme of values always conducive to the security and well-being of the Republic? Whether it is or not, it is often decisive at crucial historical turning points. And it isn't subject to review in any public forum.
I don't assert that every single individual--man, woman and child--in the circle of great wealth has an active role in this process of control. Many are far from the centers of power, leading la dolce vita, and hardly know what goes on. Some are utterly incapable, confined in sanatoria, the wards of family trustees. Still others, present in full command of able faculties, disapprove of the general trend but are unable to prevail against what is basically a group momentum.
Many people own some stock. Each share is entitled to a vote. An owner may refuse to vote, in which case decisions are made despite him. Usually he sends in his proxy to be voted for the management, which is the way the Russians vote: for a single ticket. However, he may decide that he wants to vote against the management, in which case he must at great cost and effort round up many other stockholders. This task in any company is about as great as putting an opposition slate in the field in a Russian "election. " Occasionally it succeeds, although not when initiated by small stockholders. One must have some large blocks of stock to begin with if one hopes to check or unseat any established management-blocks of 5, 10 or 15 per cent of all outstanding stock. If one has that, one appeals for other large blocks to join, or buys additional large blocks in the market (for vast sums, which one must be presumed to have). For it is ownership blocks that determine who the managers shall be.
If one miraculously wins the election, one has the task of installing new managers, men more to one's liking. But the one who can do this is himself one of the top dogs. He is not a small stockholder.
Such control is exercised not in one company or in a few companies (contrary to what is often supposed) but through a long series of interlocking companies. It is what constitutes power in the American system. It may not be power as great at a single moment as that possessed by some elected officials, such as the president, but it is a more continuous power. An elected public official, even a president, must from time to time undergo the hazards of a formal election at regular intervals. And even a president is limited to a maximum term of eight years, whereas the head of a big corporation or bank can remain in office for forty or fifty years and can see many presidents of the United States come and go.
Deficit in Public Services
The converse of the great concentration of personal wealth is the great deficit in needed public social services. On the corporation front, the country is obviously extremely lusty. But in education and medicine, to cite merely two areas, everything suddenly becomes extremely meager, scrounging and hand-to-mouth. This disparity is curious in a wealthy country and forcefully reminds one of Benjamin Disraeli's allusion to two nations, the rich and the poor. But the deficits in these areas, the dialecticians will be quick to point out, are gradually being met now by government out of taxes. As we shall see later, however, the contribution of the top wealth-holders to taxes is disproportionately low. The wealthy, like everyone else, dislike to pay taxes and, unlike most other people, they know how to minimize them through the exercise of political influence. This is one of the nice differences between being wealthy and being poor.
The Constitution of the United States bars the bestowal of titles of nobility. But in many ways it would clear up much that is now obscure if titles were allowed. Not only would they show, automatically, to whom deference was due as a right but they would publicly distinguish those who held continuing hereditary power from people who are merely temporarily voted in or appointed for limited terms. The chroniclers of High Society-that is, the circles of wealth--recognize this need and, in order to show hereditary status and family position, they allude to males in the line of descent by number, as in the case of royal dynasties. Thus in the English branch of the Astor family there is a John Jacob Astor VII. 45 But there are also George F. Baker III, August Belmont IV, William Bird III, Joseph H. Choate III, Ire? ne? e and Pierre du Pont III, Marshall Field V, Potter Palmer III, John D. Rockefeller IV, Cornelius Vanderbilt V and so on. 46
It is names such as these that would properly be found in an American Almanach de Gotha.
Two
ROOM AT THE TOP: THE NEW RICH
Were it not for the miscellaneous batch of hard-bitten, shirt-sleeved Texas oil-lease speculators and wildcatters that since World War I has risen on a tide of special tax privileges like science-fiction dinosaurs, it could well be said that the day of accumulating gargantuan new personal fortunes in the United States is just about ended; this leaves the tubbed, scrubbed, and public-relations-anointed inheritors of the nineteenth-century money scramble holding most of the chips. As it is, fortune-building continues--albeit at a greatly subdued pace outside the lushly flowing oil industry. For just about everything else of marketable value is tightly vaulted down, much of it resting comfortably in trust. But even in the oil industry, magnitudes are exaggerated, Texas-style, by writers who desire to bedazzle readers with a modern if oil-soaked Arabian Nights tale.
New personal wealth is dealt with in this chapter-that is, great individual wealth that has shown itself since World War I and, more particularly, since World War II. For the most part it is wealth not known to Gustavus Myers, historian of the first waves of American fortunes and, partly because of the give-away oil depletion allowance, it postdates America's Sixty Families (1937). Classification of these new fortunes with respect to wealth and super-wealth and their comparison with the old fortunes are deferred until Chapter IV.
Actually, before larger sums are bandied about in these pages, let it be noted that a person worth only $10 million (insignificant though $10 million is compared with many modern fortunes) is very, very wealthy indeed. If a prudent, hardworking, God-fearing, home-loving 100 per cent American saved $100,000 a year after taxes and expenses it would take him a full century to accumulate such a sum. A self-incorporated film star who earned 81 million a year and paid a 10 per cent agent's fee, 10 per cent in business expenses, a rounded 50 per cent corporation tax on the net and then withdrew $100,000 for his own use (on which he also paid about 50 per cent tax) would need to be a box- office rage for thirty-four unbroken years before he could save $10 million. Yet some men do acquire such sums--and much more. But never by offering mere talent, whatever it is, in a free market. Even the most talented bank robbers or kidnappers have never approached such an accumulation before being laid low by the eager gendarmerie.
The incandescent Marilyn Monroe, as big as they come in filmdom and a veritable box office Golconda, died broke-an old story with the mothlike entertainers and professional athletes. She bequeathed 81 million to friends but, despite posthumous earnings of $800,000 accruing to her estate, nothing was left after taxes and creditors' claims. Clearly she was in need of a tax lawyer. There was even nothing left to establish a trust fund to generate a paltry $5,000 a year for her invalid mother. Yet Miss Monroe, obviously a true-blue American, reportedly drew $200 million to the box office from 1950 to 1963. 1 More recent reports indicate that something was salvaged for her mother.
Hard to get, $10 million shows its power in another way. If invested in tax-exempt securities it can generate about $250,000 a year. Now if the owner exercises initial frugality and invests this income similarly each year, it will produce $6,250 the first year and (disregarding compound interest all along) $12,500 the second year, $18, 750 the third year, $25,000 the fourth year and so on, In the tenth year the income of the accumulated income of the original $10 million Will be $62,500 on a new capital sum of $2. 5 million, which automatically doubles itself every ten years. The owner might
even do a bit better by investing in taxable securities and paying taxes, particularly on the second accumulation, but I have focused on tax-exempt securities in order to keep to the simplest terms. Yet the ordinary man on his 4 or 5 per cent in the savings bank must pay full taxes. This sort of accumulating on the income of the income, thus generating new capital sums, has long been the investment style of old Boston and Philadelphia families. Careful to a fault, they own only small yachts, drive only old (but well- maintained) cars and are accustomed to wear old but expensive clothes of the first class so that they look quaintly dowdy. And they intermarry with old families, unfailingly. They are people who would rather study the fine engraving on a stock certificate than the brush strokes of an old master. They are, in short, respectably, unobtrusively rich.
How the sizes of new fortunes were obtained will appear in the text. The Most conservative available figures are used throughout and are critically evaluated. For precise figures it would be necessary to get certified copies of net worth, which (not being voluntarily proffered ) could be obtained only in the unlikely event of a congressional subpoena with the acquiescence of the Supreme Court. The sacred right to privacy is used to screen the dimensions of great wealth, although privacy becomes expendable when young men are summoned into the armed forces for "police" duty at coolie pay and are unceremoniously ordered to strip naked for minute scrutiny and examination. And if subpoenaed the figures might not be even momentarily accurate because, owing to the undeveloped state of a part of many large holdings, the owners themselves honestly don't know how much, at going market prices, they are worth. Seeking such accuracy in the figures amounts to committing the fallacy of misplaced precision. 2
The Fortune Study
Fortune, stepping into the data vacuum decreed by a delicately sensitive Congress, has given us the latest pre? cis on the largest individual contemporary fortunes. 3 Beginning our exposition with it and selecting only the relative newcomers, we find that with few exceptions the newer fortunes rose on the basis of oil and its generous depletion allowances, and upper executive position in General Motors Corporation.
Fortune assumed, reasonably enough, that an income of $1 million or more per year (some incomes range much higher--up to perhaps $25 to $50 million) might suggest asset-holdings of at least $50 million. But some large incomes are nonrepetitive, derive from unloading assets (which might have been procured very cheaply) at a large profit; they are not the same as continuing incomes from investments. The incomes swollen by relieving oneself of assets at higher prices (capital gains) are reflected in boom times in the sharp rise in million-dollar incomes-- from 49 in 1940 to 398 in 1961. But no steady million-dollar incomes at all blossom from the sale of services or talent; not even the most extravagantly rewarded executives or film stars pick up that much in straight across-the-board pay.
The point of departure for Fortune was a Treasury official's estimate that in 1957 there were between 150 and 500 $50-million-plus asset-holders; there were actually 223 incomes of $1 million-plus, according to the Treasury's subsequently published Statistics of Income: 1957 (p. 20). Fortune to its own satisfaction identified 155 of them by name. Of this group it published the names of half, the ones thought to possess assets of $75 million upward, and gave estimates of their net worth in broad ranges. Fortune also named a few other steady big-income beneficiaries at random in its text, outside its list, giving no reason for this deviation. The list, confined to then living people, did not name all the big post-1918 fortunes, although here and there some persons who had
recently died were mentioned. Some such fortunes omitted from the Fortune list will be mentioned further along.
Before scanning the Fortune list and then noting qualifications of it, the reader will be better prepared if he ponders over the tables in Appendix A that provide a broad statistical background since 1940 on the larger incomes and lay the ground for some incisive observations. In the upper brackets at least, these income recipients abstractly impaled like skeletal insects in the tables are unquestionably included among Lampman's 1. 6 per cent of adults that compose American wealth-holders. No doubt the Fortune list in its entirety, with some additions to be supplied, represents a part of the moneyed elite of the Lampman higher strata. But in the group of Appendix A incomes below $100,000 or so, many are only those of potential wealth-holders--for the simple reason that they are from salaries.
Property and Politics
Nonetheless the varying totals shown in Appendix A of incomes in excess of $25,000--numbering 49,806 in 1940 and 626,997 in 1961--certainly represent the cream of the take in the American svstem. This is not a large group and, in relation to a population of nearly 260 million, of which more than half are adults, it is not any different in relative size from the small group of tight-fisted landowners found in Latin American countries or from the Communist Party of Soviet Russia.
In order to participate in politics in the Soviet Union one must be a member of the Communist Party.
Zero 4. 7
$1-$999 9. 0
$1,000-$4,999 10. 8
$5,000-$9,999 9. 1
$10,000-$24,999 13. 3
$25,000-$49,999 6. 2
$50,000-$99,999 2. 5
$100,000-$199,999 . 7
$200,000-$499,999 . 5
$500,000 and up . 2
In stating that 200,000 households held 22 per cent of the wealth there is some danger of suggesting that the power of these 200,000 is less than it actually is. The nature of the wealth held is of determining importance here. in general, the lower wealth-holders mostly own inert assets such as automobiles, small amounts of cash and some residential equity, while the upper wealth-holders mostly own corporate equities in an aggregate amount sufficient to show that they are in full control of the productive side of the economic system.
Households in the number of 200,000 worth $500,000 and more held 32 per cent of all investment assets and 75 per cent of miscellaneous assets, largely trust funds, while 500,000 worth $200,000 to $499,999 held 22 per cent of investment assets. The 700,000 households worth $100,000 to $199,999 held 11 per cent of investment assets. 31
Center of Economic Political Control
We see, then, that 1. 4 million households owned 65 per cent of investment assets, which are what give economic control. Automobile and home ownership and bank deposits do not give such control. The economic power of the upper 200,000 is greater than indicated by their ownership of 22 per cent ,of all assets; it amounts to 32 per cent of investment assets.
Experts concede that a 5 per cent ownership stake in a large corporation is sufficient in most cases to give corporate control. It is my contention that general corporate control lies in this group of 200,000 very probably and almost certainly lies in the combined group of 700,000 wealthiest households, slightly more than 1 per cent, owning assets worth $200,000 and more.
There is a danger here, as the erudite will recognize, of perpetrating the logical fallacy of division--that is, arguing that what is true of a whole is true of its individual parts. That argument here would be that because 200,000 households own 32 per cent of investment assets they each hold a stake of exactly 32 per cent in the corporate system. I do not make such a ridiculous argument. First, this upper group concentrates its holdings for the most part in leading corporations, bypassing the million or so papertiger corporations of little or no value. Again, as just noted, far less than 32 per
cent of ownership in any individual corporation is required to control it. Control, as we shall see, is the relevant factor where power is concerned. Usually comparatively little ownership is necessary to confer complete corporate control which, in turn, extends to participation in political control.
A man whose entire worth lies in 5 per cent of the capital stock of a corporation capitalized at $2 billion is worth only $100 million. But as this 5 per cent--and many own more than 5 per cent--usually gives him control of the corporation, his actual operative power is of the order of $2 billion. Politically his is a large voice, not only because of campaign contributions he may make but by reason of all the legislative law firms, congressional and state-legislative, under retainer by his corporation; for every national corporation has law firms in every state. There is additionally to be reckoned with all the advertising his corporation has to dispense among the mass media as a tax- free cost item, the lobbyists his corporation puts into the field and the cultural-charitable foundations both he and the corporation maintain.
Such a man, worth only $100 million net, is clearly a shadowy power in the land, his ownership stake vastly multiplied by what he controls--other people's property as well as his own. And there are more than a few such.
On the other hand, many intelligent citizens today complain in the face of the alleged complexity of affairs of feelings of powerlessness. Their feelings are justified. For they are in fact politically powerless.
The actual power of such concentrated ownership, therefore, is much greater than its proportion in the total of investment assets. The corporate power of the top 200,000, and certainly of the top 700,000, is actually 100 per cent. The power of this top layer corporatively would be no greater if it owned 100 per cent of investment assets. Actually, it might be less: It would then receive no support from many tremulous small holders but would probably find them in political opposition.
As to distribution of investment assets among smaller property holders, 1 per cent are owned by the $5,000 to $9,999 group, 7 per cent by the $10,000 to $24,999 group, 11 per cent by the $25,000 to $49,999 group and 15 per cent by the $50,000 to $99,999 group, or 34 per cent in all. In this group of comparatively modest means one finds some of the most voluble supporters of the established corporate way. Within their own terms they are all winners, certainly hold some financial edge. Most of them, as their expressions at stockholder meetings show, greatly admire the larger stockholders. In their eyes, a divinity doth hedge the large stockholders.
Net Worth in the Populace
Approached in terms of net worth (assets less debt) the situation of the lower populace is more unfavorable, as shown in the following table. 32
Net Worth
Negative (deficit)
Zero
$1-$999
$1,000-$4,999
$5,000-$9,999
$10,000-$24,999
$25,000-$49,999
$50,000-$99,999
$100,000-$199,999
Percentage of
Consumer Units
11
5
12
17
15
23
10
4
1
$200,000-$499,999
$500,000-$999,999
$1,000,000 and more
1
Less than 1/2 of 1 per cent
Less than 1/2 of 1 per cent
As this table shows, 28 per cent of the households had a net worth of less than $1,000; the 11 per cent with a deficit, on balance in debt in varying amounts, greatly exceeded the percentage of those worth $50,000 and more. The less than 1/10th of 1 per cent who were millionaires (from time to time pointed to with pride by Time, Fortune and the Wall Street Journal) were offset by 11 per cent of households worth less than zero. Add the zerogroup and one obtains 16 per cent of all households. Forty-five per cent of all households had a net worth of less than $5,000. Is this affluence?
The View from the Bottom
A sensitive statistical analysis meriting the closest attention by all students of the distribution of wealth is that of Harvard's Dr. Gabriel Kolko, Wealth and Power in America. Not only does he develop essentially the same perspective as Lampman and the University of Michigan--"Since World War II, one-tenth of the nation has owned an average of two-thirds of liquid assets" (p. 49)--but he attacks the problem from below. He has no difficulty in showing, on the basis of official figures that, as of affluent 1957, 44 per cent of the spending units (households) lived below the maintenance level set by U. S. Bureau of Labor Statistics budgets, and that 27. 5 per cent lived below the emergency level. 33 These figures represent a slight improvement over 1947, when the figures were 51. 2 per cent and 27. 5 per cent.
Dr. Kolko approaches the problem via income from all sources, employment as well as assets. As he shows, using Bureau of Census and University of Michigan figures, the distribution of income in the United States is fantastically lopsided. Whereas the lowest tenth of the population in all years from 1947 through 1955 received only 1 per cent of national personal income after federal taxes, the upper tenth in the same years received from 27 to 31 per cent. The second from the lowest income-tenth received 3 per cent of income from 1947 through 1955 except for the years 1953 and 1954, when it received 4 per cent. The third from the bottom income-tenth received 5 per cent throughout these years.
For 1947-55, in other words, the three lowest income-tenths, or 30 per cent of recipients, received 9 per cent of national income after taxes compared with a varying 56-58 per cent for the three upper income-tenths. 34 These figures: spell poverty in all starkness--particularly in view of the greater concentration of children on the lower and poorly guided levels. Oddly, the prospect does not improve very much as one ascends until one gets to the very top. For the fourth income-tenth from the bottom received only 6 per cent of income, and the fifth income-tenth received only 8 per cent. It is not until the sixth tenth from the bottom that one finds 10 per cent Of the receivers obtaining 10 percent of the income, balanced distribution. The next highest got 11 per cent, the next received 13 per cent and the next to the top got 16 per cent.
But if the top income-tenth, which received 27 per cent of income in 1955, were to be broken down into 1 per cent groups, we would find, as established by Lampman, that the top 1 per cent got the lion's share. For the higher one ascends, the fewer the number of persons involved, the greater the percentages of participation in economic advantages. Again let me remind readers, these incomes are from employment as well as from assets. It is the asset-derived income that is the most desirable, involving little or no strain on one's time or energy. With that kind of income one is not chained to a
job, often ungratifying in itself. With asset-income one can choose one's line of endeavor or choose to be completely idle while others work.
Inadequate Counter-Measures
Not only is poverty in the United States very deep and widespread, Dr. Kolko clearly shows, but the various New Deal measures devised to mitigate it-Social Security, unemployment insurance, disability relief, minimum wage laws and the like-are quite inadequate in their coverage. There is no such thing, as newspapers repeatedly insist, as an embryonic Welfare State in the United States. This is evident in the fact that the average monthly oldage insurance payment in 1963 was $77. 03, or $924. 36 per year.
As to savings by each income-tenth, the lowest income-tenth has long lived on a deficit, From 1929 to 1950 this deficit varied from 2 to 35 per cent, standing at 16 per cent in 1950. Not only does this group not own anything but it is deeply in debt. The lower 50 per cent of income receivers in 1950 had a net savings deficit of nearly 18. 5 per cent; the sixth income-tenth from the bottom had only 4 per cent of net national savings, with the figures rising thereafter by income-tenths from 10 to 11 to 20 and to 72 per cent for the top tenth. During the depression years of 1935-36, the net savings of the top income-tenth amounted to 105 per cent, of the next income-tenth 13 per cent, of the next income-tenth 6 per cent and of the fourth income-tenth 2 per cent-adding up to 126 per cent. But 60 per cent of the lower income receivers incurred debt of 25 per cent as an offset. 35 In this numbers game much of what one saves another owes.
To all this some hardy souls respond by saying, "Well, that's the way the ball bounces, that's the way the cookie crumbles. " In other words, all this is the consequence of the inevitable interplay of chance factors in which some persons are the lucky winners or the more intelligent players.
Planned Consequences
But actually the results at both the top and the bottom are contrived. They are the outcome of pertinacious planning. For example, it is known on the basis of other careful studies that the lower income levels are disproportionately populated by Negroes and poor southern whites. They don't account for all of the lowly by any means; but they do account for very many. And the economic plight of both the Negroes and the southern whites is the consequence of a longstanding political power play. Southern Democratic Party gravy-train politicians after the Civil War, seeing a popular local issue in "restoring slavery in all but the name," 36 asked for and received northern Republican acquiescence that would insure personally lucrative Democratic one-party dictatorial rule in the South. In return they agreed to deliver unbroken congressional support to the Republicans in blocking the rising national clamor, mainly from organized labor, for needed social legislation. For nearly a hundred years the scheme has worked perfectly, and the politically confused southern white in holding the Negro down, culturally and economically, has kept himself down to the same level. The scheme has had wider effects, as it has enabled the wealthy backbone of the Republican Party to keep a good portion of the rest of the country deprived, particularly of needed educational and social measures. The social role of the Republican Party ever since the death of Lincoln has been delay and obstruction, even though off and on there have emerged responsible, forward-looking Republicans.
This isn't to say that the foregoing paragraph accounts for the existence of deep and widespread poverty in the midst of fabulous wealth, but it accounts for some of it.
The Mild War on Poverty
President Lyndon B. Johnson in 1964 startled average newspaper readers by suddenly announcing, out of a seemingly cloudless sky, his "war on poverty. " This was widely interpreted, cynically, as a pure vote-getting ruse, of no intrinsic merit. For was it not a fact, as newspapers vowed, that there was no genuine poverty in the prosperous, high- living United States? But since then, as a result of official speeches and the passage of an initial anti-poverty measure exceeding $1 billion, the country has been gradually introduced to the strange, even subversive, notion that poverty is prevalent in the United States.
The argument has now shifted, as it is always bound to in the nimble hands of the dialecticians, to what precisely constitutes poverty. Sargent Shriver, director of the Office of Economic Opportunity and former President John F. Kennedy's brother-in- law, suggested that a family of four with a yearly annual income under $3,000 and an individual with an income under $1,500 be classified as poor, which would put more than 30 per cent of all families in the poverty-stricken category according to University of Michigan figures. For the University of Michigan Survey of Consumer Finances showed for 1962 that, while the figures of the lowest tenth of all spending units (households) were not then available, the figure for the next to the lowest tenth was $1,510 for each household; and for the third from the lowest tenth it was $2,510. For the fourth tenth from the bottom it was only $3,350. 37 Mr. Shriver subsequently raised his figures to $3,130 and $1,540.
The United States Chamber of Commerce predictably challenged Mr. Shriver's first gauge of poverty as too high. "The Chamber of Commerce based its criticism of the old gauge," said the New York Times, "on the fact that a small family living in a warm climate and growing most of its own food could live comfortably on $3,000 a year. "38 As the patient could rest easily on this amount of income, why introduce him to luxuries--such as medicine?
Mr. Shriver, himself a wealthy man, more recently indicated that 35 million American families are "poverty-stricken," untouched by existing programs for assisting the poor. 39 If one assigns only 3 persons to a poor family, many of which have many more, one obtains 105 million persons out of a population of 180-plus million.
Rather obtusely the Chamber of Commerce people did not recognize that the Administration, in dealing with a serious situation (for whatever motives, humanitarian or self-serving) had produced a deceptive new official yardstick for measuring poverty: income. Down through history poverty has always referred to lack of property. The man who had no property was defined as poor; the more property a man owned the less poor he was. Most people in the United States own little more property than do Russian peasants, and by that standard they are poor.
By the Shriver standard, if a family had income from uncertain employment of twice $3,130 a year it would not be poor. While many Americans by the Shriver standard are poor, most are not--even though they own nothing worth speaking of. But the Shriver standard makes it appear that most people are well off, which is hardly true.
Poverty Defined
For my part, I would say that anyone who does not own a fairly substantial amount of income-producing property or does not receive an earned income sufficiently large to make substantial regular savings or does not hold a well-paid securely tenured job is poor. He may be healthy, handsome and a delight to his friends--but he is poor. By this standard at least 70 per cent of Americans are certainly poor, although not all of these by any means are destitute or poverty-stricken. But, as was shown in the 1930's, Americans can become destitute overnight if deprived of their jobs, a strong support to mindless conformity. As a matter of fact, many persons in rather well-paid jobs, even executives, from time to time find themselves jobless owing to job discontinuance by reason of mergers, technical innovation or plant removal. Unable to get new jobs, they suddenly discover, to their amazement, that they are really poor, and they also discover by harsh experience to what specific conditions the word "poverty" refers. And even many of those who never lose their jobs often discover in medical and similar emergencies that they are as helpless as wandering beggars. They are, in fact, poor. In such eventualities the man of property is evidently in a different position. He is definitely not poor. And this is all I say.
Conditions in England and India
The United States, in the short period since the public lands were distributed to the people, often through the intermediation of profit-skimming railroads, has rather quickly been brought close to the position of older countries such as England. In 1911- 13 the small fraction of 0. 63 per cent of persons over age 25 in England owned 57 per cent of all capital, compared with 1. 84 per cent of such persons owning 51. 92 per cent of capital in 1946-47. In 1911-13 1. 53 per cent owned 66. 9 per cent of capital compared with 4. 56 per cent owning 63. 27 per cent of capital in 1946-47. 40 Observers see a slight tendency to equalization in these figures.
But in superstition-ridden India about 1 per cent of the population gets half of all income. 41
Apart from the differences in the proportions, a difference between the United States on the one hand and England and India on the other is that in the latter there is a much longer history behind each condition. In the United States it is recent.
Some Preliminary Conclusions
It should be evident in studying the Lampman and Federal Reserve figures on estates that the United States now has a well-established hereditary propertied class such as exists in Europe, which Americans have long looked upon disdainfully as the stronghold of class privilege. Great wealth in the United States, in other words, is no longer ordinarily gained by the input of some effort, legal or illegal, useful or mischievous, but comes from being named an heir. Almost every single wealth-holder of the upper half of 1 per cent arrived by this route.
Lampman's figures clearly indicate this. He noted that 40 per cent of the top wealth- holders are women. Now, while some women have garnered big money by their own efforts--Mary Pickford, Greta Garbo, Helena Rubinstein and a sprinkling of others in the world of entertainment and fashion--few women have been even modest fortune builders. Women simply do not occupy the money-making positions in finance, industry and politics. But they have been heirs.
It is true that estate splitting between husband and wife is increasingly resorted to in order to take advantage of tax provisos. But this works both ways. Women can split estates with men just as men can with women. And on the upper level of wealth it is usually wealthy people who marry each other. Otherwise it is front-page news. Even if it is contended that not so many as 40 per cent of the men are in the picture because of estate splitting, the men are, as heirs, prominent among the wealthy for another reason. Many men, having inherited a smaller estate, have expanded their wealth through shrewd operations. J. Paul Getty, whom certain English newspapers insistently refer to as "the richest man in the world," inherited $7 million from his father many years ago, thus placing him well in the millionaire class. He has through operations in the oil business gone well beyond this level. Nevertheless he is not "self made. " There are more than a few Gettys among the top wealth-holders.
It can therefore be concluded that at least 40 per cent of the men, or 24 per cent of all the top wealth-holders, are heirs, bringing to more than 60 per cent the hereditary proportion. I believe, on other grounds, that the proportion of male heirs in the group is much larger. Women, owing to their inexperience with financial affairs, are generally poor estate managers, Hetty Green notwithstanding. They are more easily victimized by specious schemes, fail to take advantage of obvious opportunities, and so tend to drop out of the group and to be under-represented. Men are usually financially more capable and their greater staying power entitles them statistically to a larger representation among the heirs than women. More conclusively, it is directly observable among the super-rich that the possessors--men or women--are simply heirs. They got there by listening to a will being read, not by schemes that fill some observers with unaccountable transports of delight, that others consider unspeakably ignoble. There are few newcomers, as we shall see in the next chapter.
Although a man who amassed his own money would figure only once among the propertied, some who are heirs are heirs many times over, having inherited from many testators. This has taken place on the upper, intermediate and lower levels of wealth. And this occasional process leads to further concentration.
The federal estate-tax statistics since 1916 show that an avalanche of wealth has been transferred over fifty years by testamentary bequest. Individuals inherited in nearly every case. Whatever the presence of rags-to-riches moneymakers in the past the acquisitors now are largely gone. The inheritors are in possession.
Extended Family Groups
Lampman's figures relate to individuals. They do not show that most of the people in the upper 1/2 of 1 per cent that now probably own at least 33 per cent (by value) of all assets are members of extended family groups. There are more than 1,600 Du Ponts, not all individually in the upper circle. There are sizable clusters of Rockefellers, Vanderbilts, Whitneys, Mellons, Woolworths, Fishers, Phippses, Hartfords and others. Through distaff marriages part of the big fortunes are concealed behind offbeat names, such as Cecil (Vanderbilt). The well-groomed heirs or their representatives often sit together amicably on the same boards of directors. Most belong to the same metropolitan clubs.
But the rather well-populated group that Lampman calls top wealth-holders also certainly contains many blanks as far as big wealth is concerned. It will be recalled he stressed that more than half of his top group had no more than $125,000 of assets--a paltry sum, even though in thousands of neighborhoods around the country a man with such wealth would be looked upon as a Croesus.
Owing to intermarriage among the wealthy, property holdings tend to concentrate in fewer and fewer hands. For the propertied, not without sound reason, often suspect the marital motivations of the nonpropertied. 42
These processes cannot help but concentrate wealth and make the scope of new estate builders less ample. There is less and less room at the top for new moneymakers. Although there are new successful enterprises, they are all comparatively small. Some are absorbed by the bigger enterprises on advantageous terms. None shows the slightest sign of becoming another Ford Motor Company. All the big bets seem to be down. Rien n'a va plus.
Apologists on the Defensive
But this panorama of contemporary private wealth and power throws some doubt on the doctrines of earlier apologists for the big fortunes. It was once widely preached from pulpits as well as editorial pages that great wealth was either the reward for social service (such as graciously building a vast industry to cater to an undeserving public) or it represented the inevitable, natural and wholly acceptable outcome of an evolutionary struggle in which the fittest survived and the unfit landed in the gutter. On the basis of this doctrine the present top wealth-holders are the offspring of public benefactors and the fittest of a past generation. Fortunately, they are not themselves facing the same tests of fitness.
It was also once often said that, if all money were equally divided among all the people, in less than a generation it would be back in the same hands. While this may have been true when the original fortune-builders were alive, it is hardly true any longer, when the heirs would have to contend with gentry like Mr. James J. Hoffa and Mr. Frank Costello. In a struggle waged outside the Marquis of Queensberry rules (which is where the fortune-builders operated) most of the present wealth-holders, many of them personally attractive, would hardly be voted most likely to succeed. Could they make much headway against Jake Guzik and Tony Accardo? Al Capone and Machine- Gun Jack McGurn?
Down through the years all the estates have been subject to taxation--federal and sometimes state--but to much less than is commonly supposed, as we shall see. There is no process of estate destruction taking place in the United States through taxation, as is commonly suggested by propagandists of the Establishment. And few estates, unless there are no heirs, pass to institutions. But many estates pass indirectly as well as directly to heirs through various arrangements such as delayed-action trust funds, endowments and foundations. The indirectly conveyed portions are operated by the heirs for their own beneficial interest.
The Fortress of Interlaced Wealth
What has developed, then, under the operation of inheritance laws handed down from days when property ownership was far more modest to a day when vast properties have been created mainly by technology, is a huge, solid fortress of interlaced wealth against which even clever new wealthseekers, try as they will, cannot make a tiny dent. About the only way one can get in (and that way isn't always rewarding) is by marriage. If a potential new Henry Ford produces an invention and sets out with friends to market it he generally finds (as did Professor Edwin H. Armstrong, inventor of wide-swing radio frequency modulation, the regenerative circuit for vacuum tubes, ultra short-wave super-regeneration and the superheterodyne circuit) that it is boldly infringed by
established companies. After he spends the better part of a lifetime in court straining to protect his rights he may win (usually he does not); but if he wins he collects only a percentage royalty. What the infringers can show they have earned through their promotional efforts they may keep, with the blessings of the courts, who are sticklers for equity: All effort must be rewarded. And then the overwrought inventor, as Professor Armstrong did in 1954, can commit suicide.
Henry Ford came up when there were only small competing companies in the field. When established companies are in the field, inventors must sell out, or suffer a fate similar to Professor Armstrong's.
The Role of the People
The inheritance laws have played a major role in the development of great fortunes. But they haven't been the only factor. A small group, unless possessed of direct dictatorial power, could not unaided have served itself so generously, even if masters of stealth. Writing about the wealthy in America's Sixty Families, page 5, I remarked: "The situation, for which the people themselves are in a great measure to blame. . . . " The public itself has facilitated and continues to facilitate the building of vast hereditary private power within the American elective system of government. This public is in many ways a self-made victim, as sociologists now regard many victims of crimes.
The contrast I have posed between concentrated wealth and widely distributed poverty may seem to suggest that I am arguing for the equalization of wealth. But though there is obviously considerable room for some equalization I shall not argue for it because there are millions of people who could not hold on to $10 for five minutes or $10,000 for five months.
If wealth were equalized, what would we have? As Lampman showed, if all asset- wealth as of 1953 were equally apportioned, there would be about $10,000 for each adult. Let us suppose that a share in this amount were held for each adult in a national trust supervised by the United States treasury. The income from each share at 5 per cent would be $500 per annum. If one adds this to the present amount of each person's earned income it would not amount to much, however welcome it would be for some in the lowest brackets.
If inequality of income is not the main question, what is?
Policy-Making Power of Wealth
First, the present concentration of wealth confers self-arrogated and defaulted political policy-making power at home and abroad in a grossly disproportionate degree on a small and not especially qualified mainly hereditary group; secondly, this group allocates vast economic resources in narrow, self-serving directions, both at home and abroad, rather than in socially and humanly needed public directions.
When, through its agents, it cannot enlist the government in support of its various plans at home and abroad it can, and does, frustrate the government in various proceedings that have full public endorsement. It involves the nation in cycles of ferocious wars that are to the interest of asset preservation and asset expansion but are contrary to the interest of the nation and the world. It can and does establish connections all over the world that covertly involve American power in all sorts of ways unknown until some last-minute denouement even to Congress and the president.
It doesn't do any of this maliciously, to be sure, any more than an elephant feels malice when it rubs against a sapling and breaks it in two. An elephant must behave like an elephant, beyond any moral stricture. And power of any kind must exert itself. Historically it has invariably exerted itself in its own self-visualized interests.
So, concentrated asset-wealth not only brings in large personal incomes, but confers on the owners and their deputies a disproportionately large voice in economic, political and cultural affairs. Thus the owners may make or frustrate public policy, at home and abroad.
Low Incomes of Vital Personnel
Managers of concentrated asset-wealth determine, among other things, how much is to be paid for various services--who is to be paid a great deal and who is to be paid very little. Some people, for the convenience purely of asset-wealth, are rewarded munificently for services of comparatively slight social importance--for example, certain leading company executives. Other persons are paid poorly for what are universally insisted to be superlatively valuable services--for example, scientists, engineers, artists and teachers. The pay of scientists in the United States in the 1960's, according to the National Science Foundation, is in the range $6,000-$15,000 per annum,43 far less than that of an astute salesman of encyclopedias or vacuum cleaners. Referring to "starvation wages," Paul Woodring, educational consultant to the Fund for the Advancement of Education of the Ford Foundation, said: "There are dozens of liberal arts colleges which pay average salaries as low as $3,000 per year and minimum salaries much lower still. " 44 If it is said that such compensation has more recently been increased (which isn't generally true), one may still ask: Is it anywhere near the astronomical level of executive salaries?
Of salaries of scientists and teachers, a company director would say: "What have we to do with those? They aren't in our jurisdiction. The executive salaries, I admit, are. "
My response to this is: When the leading cadres of wealth want to be the government, as we shall see, they are the government. When they don't want to be, when there is some delicate problem to be solved, they say, "Go to Washington about that. It's out of our jurisdiction. " But even in Washington they have many friends who believe that teachers and scientists should not be spoiled by being paid ample wages.
Marxism and the Workers
Marxists hold that it is the workers-factory workers--who are 'being deprived to insure profits for the rich. And this may be so to some extent in some times and places, and at one time it was so universally in the United States. But the workers would not likely be paid more and would probably be paid less than they are now in thoroughly unionized industries: under such so-called Marxist regimes as we have yet seen.
In some instances, owing to organization and the balance of external forces, some categories of unionized workers in the United States today are probably disproportionately rewarded, are paid more than many trained scientists. Their leaders have simply seized opportunities to exert leverage in the power structure, threatening to disrupt production.
Lest I leave a misleading impression of American workers, it must be said that the position of the unorganized and unskilled is very bleak, in the depths of poverty. So- called white collar workers are also poorly paid. Since World War II the custom has
spread among low-paid skilled people, particularly teachers, of working at two jobs, a practice known as "moonlighting. " Police and firemen, too, participate in the practice, and so do even skilled factory operatives who wish to keep above the poverty level. At a time when many sociologists discourse fervidly about a coming thirty-hour week and assert increasing leisure to be a basic human problem, many moonlighters work sixty and seventy hours a week, hardly a step forward from the nineteenth century twelve- hour day. The moonlighters drive taxis, tend bar, act as property guards, work in stores, etc.
But if the workers in general are indeed deprived for the sake of profits they wouldn't be benefited much directly by an egalitarian distribution of assets, nor would anyone else. For it isn't the factor of ownership of assets in itself that is crucial. It is the factor of general control that concentrated ownership confers that needs to be understood. Owing to the strength given them by their concentrated and combined assets, the big owners and their paid managers have a major if not always decisive voice in running the economic system, in backing the political parties and their candidates and in influencing if not determining national policies from the highest to the lowest. The ownership titles, reinforced many times over from the vantage point of banks and insurance companies, are what constitute the ticket of admission. The amount of ownership at the top of the pyramid necessary to insure such control for any group may be only 5 per cent. Scattered smaller owners, if there are any, cannot gather enough stock to overcome the leading blocks and would not know what to do if they could.
The Radiation of Control
This control at one or a few points radiates through all of industry, with a few central groups participating in a cooperative manner. The industrial control (to be shown later) gives command over vast resources, some of which are used to influence political parties and candidates, newspapers and other publications. A tacit, uncriticized scheme of values is put into action and is absorbed by many people far from the scene. The point to be raised is this: Is this scheme of values always conducive to the security and well-being of the Republic? Whether it is or not, it is often decisive at crucial historical turning points. And it isn't subject to review in any public forum.
I don't assert that every single individual--man, woman and child--in the circle of great wealth has an active role in this process of control. Many are far from the centers of power, leading la dolce vita, and hardly know what goes on. Some are utterly incapable, confined in sanatoria, the wards of family trustees. Still others, present in full command of able faculties, disapprove of the general trend but are unable to prevail against what is basically a group momentum.
Many people own some stock. Each share is entitled to a vote. An owner may refuse to vote, in which case decisions are made despite him. Usually he sends in his proxy to be voted for the management, which is the way the Russians vote: for a single ticket. However, he may decide that he wants to vote against the management, in which case he must at great cost and effort round up many other stockholders. This task in any company is about as great as putting an opposition slate in the field in a Russian "election. " Occasionally it succeeds, although not when initiated by small stockholders. One must have some large blocks of stock to begin with if one hopes to check or unseat any established management-blocks of 5, 10 or 15 per cent of all outstanding stock. If one has that, one appeals for other large blocks to join, or buys additional large blocks in the market (for vast sums, which one must be presumed to have). For it is ownership blocks that determine who the managers shall be.
If one miraculously wins the election, one has the task of installing new managers, men more to one's liking. But the one who can do this is himself one of the top dogs. He is not a small stockholder.
Such control is exercised not in one company or in a few companies (contrary to what is often supposed) but through a long series of interlocking companies. It is what constitutes power in the American system. It may not be power as great at a single moment as that possessed by some elected officials, such as the president, but it is a more continuous power. An elected public official, even a president, must from time to time undergo the hazards of a formal election at regular intervals. And even a president is limited to a maximum term of eight years, whereas the head of a big corporation or bank can remain in office for forty or fifty years and can see many presidents of the United States come and go.
Deficit in Public Services
The converse of the great concentration of personal wealth is the great deficit in needed public social services. On the corporation front, the country is obviously extremely lusty. But in education and medicine, to cite merely two areas, everything suddenly becomes extremely meager, scrounging and hand-to-mouth. This disparity is curious in a wealthy country and forcefully reminds one of Benjamin Disraeli's allusion to two nations, the rich and the poor. But the deficits in these areas, the dialecticians will be quick to point out, are gradually being met now by government out of taxes. As we shall see later, however, the contribution of the top wealth-holders to taxes is disproportionately low. The wealthy, like everyone else, dislike to pay taxes and, unlike most other people, they know how to minimize them through the exercise of political influence. This is one of the nice differences between being wealthy and being poor.
The Constitution of the United States bars the bestowal of titles of nobility. But in many ways it would clear up much that is now obscure if titles were allowed. Not only would they show, automatically, to whom deference was due as a right but they would publicly distinguish those who held continuing hereditary power from people who are merely temporarily voted in or appointed for limited terms. The chroniclers of High Society-that is, the circles of wealth--recognize this need and, in order to show hereditary status and family position, they allude to males in the line of descent by number, as in the case of royal dynasties. Thus in the English branch of the Astor family there is a John Jacob Astor VII. 45 But there are also George F. Baker III, August Belmont IV, William Bird III, Joseph H. Choate III, Ire? ne? e and Pierre du Pont III, Marshall Field V, Potter Palmer III, John D. Rockefeller IV, Cornelius Vanderbilt V and so on. 46
It is names such as these that would properly be found in an American Almanach de Gotha.
Two
ROOM AT THE TOP: THE NEW RICH
Were it not for the miscellaneous batch of hard-bitten, shirt-sleeved Texas oil-lease speculators and wildcatters that since World War I has risen on a tide of special tax privileges like science-fiction dinosaurs, it could well be said that the day of accumulating gargantuan new personal fortunes in the United States is just about ended; this leaves the tubbed, scrubbed, and public-relations-anointed inheritors of the nineteenth-century money scramble holding most of the chips. As it is, fortune-building continues--albeit at a greatly subdued pace outside the lushly flowing oil industry. For just about everything else of marketable value is tightly vaulted down, much of it resting comfortably in trust. But even in the oil industry, magnitudes are exaggerated, Texas-style, by writers who desire to bedazzle readers with a modern if oil-soaked Arabian Nights tale.
New personal wealth is dealt with in this chapter-that is, great individual wealth that has shown itself since World War I and, more particularly, since World War II. For the most part it is wealth not known to Gustavus Myers, historian of the first waves of American fortunes and, partly because of the give-away oil depletion allowance, it postdates America's Sixty Families (1937). Classification of these new fortunes with respect to wealth and super-wealth and their comparison with the old fortunes are deferred until Chapter IV.
Actually, before larger sums are bandied about in these pages, let it be noted that a person worth only $10 million (insignificant though $10 million is compared with many modern fortunes) is very, very wealthy indeed. If a prudent, hardworking, God-fearing, home-loving 100 per cent American saved $100,000 a year after taxes and expenses it would take him a full century to accumulate such a sum. A self-incorporated film star who earned 81 million a year and paid a 10 per cent agent's fee, 10 per cent in business expenses, a rounded 50 per cent corporation tax on the net and then withdrew $100,000 for his own use (on which he also paid about 50 per cent tax) would need to be a box- office rage for thirty-four unbroken years before he could save $10 million. Yet some men do acquire such sums--and much more. But never by offering mere talent, whatever it is, in a free market. Even the most talented bank robbers or kidnappers have never approached such an accumulation before being laid low by the eager gendarmerie.
The incandescent Marilyn Monroe, as big as they come in filmdom and a veritable box office Golconda, died broke-an old story with the mothlike entertainers and professional athletes. She bequeathed 81 million to friends but, despite posthumous earnings of $800,000 accruing to her estate, nothing was left after taxes and creditors' claims. Clearly she was in need of a tax lawyer. There was even nothing left to establish a trust fund to generate a paltry $5,000 a year for her invalid mother. Yet Miss Monroe, obviously a true-blue American, reportedly drew $200 million to the box office from 1950 to 1963. 1 More recent reports indicate that something was salvaged for her mother.
Hard to get, $10 million shows its power in another way. If invested in tax-exempt securities it can generate about $250,000 a year. Now if the owner exercises initial frugality and invests this income similarly each year, it will produce $6,250 the first year and (disregarding compound interest all along) $12,500 the second year, $18, 750 the third year, $25,000 the fourth year and so on, In the tenth year the income of the accumulated income of the original $10 million Will be $62,500 on a new capital sum of $2. 5 million, which automatically doubles itself every ten years. The owner might
even do a bit better by investing in taxable securities and paying taxes, particularly on the second accumulation, but I have focused on tax-exempt securities in order to keep to the simplest terms. Yet the ordinary man on his 4 or 5 per cent in the savings bank must pay full taxes. This sort of accumulating on the income of the income, thus generating new capital sums, has long been the investment style of old Boston and Philadelphia families. Careful to a fault, they own only small yachts, drive only old (but well- maintained) cars and are accustomed to wear old but expensive clothes of the first class so that they look quaintly dowdy. And they intermarry with old families, unfailingly. They are people who would rather study the fine engraving on a stock certificate than the brush strokes of an old master. They are, in short, respectably, unobtrusively rich.
How the sizes of new fortunes were obtained will appear in the text. The Most conservative available figures are used throughout and are critically evaluated. For precise figures it would be necessary to get certified copies of net worth, which (not being voluntarily proffered ) could be obtained only in the unlikely event of a congressional subpoena with the acquiescence of the Supreme Court. The sacred right to privacy is used to screen the dimensions of great wealth, although privacy becomes expendable when young men are summoned into the armed forces for "police" duty at coolie pay and are unceremoniously ordered to strip naked for minute scrutiny and examination. And if subpoenaed the figures might not be even momentarily accurate because, owing to the undeveloped state of a part of many large holdings, the owners themselves honestly don't know how much, at going market prices, they are worth. Seeking such accuracy in the figures amounts to committing the fallacy of misplaced precision. 2
The Fortune Study
Fortune, stepping into the data vacuum decreed by a delicately sensitive Congress, has given us the latest pre? cis on the largest individual contemporary fortunes. 3 Beginning our exposition with it and selecting only the relative newcomers, we find that with few exceptions the newer fortunes rose on the basis of oil and its generous depletion allowances, and upper executive position in General Motors Corporation.
Fortune assumed, reasonably enough, that an income of $1 million or more per year (some incomes range much higher--up to perhaps $25 to $50 million) might suggest asset-holdings of at least $50 million. But some large incomes are nonrepetitive, derive from unloading assets (which might have been procured very cheaply) at a large profit; they are not the same as continuing incomes from investments. The incomes swollen by relieving oneself of assets at higher prices (capital gains) are reflected in boom times in the sharp rise in million-dollar incomes-- from 49 in 1940 to 398 in 1961. But no steady million-dollar incomes at all blossom from the sale of services or talent; not even the most extravagantly rewarded executives or film stars pick up that much in straight across-the-board pay.
The point of departure for Fortune was a Treasury official's estimate that in 1957 there were between 150 and 500 $50-million-plus asset-holders; there were actually 223 incomes of $1 million-plus, according to the Treasury's subsequently published Statistics of Income: 1957 (p. 20). Fortune to its own satisfaction identified 155 of them by name. Of this group it published the names of half, the ones thought to possess assets of $75 million upward, and gave estimates of their net worth in broad ranges. Fortune also named a few other steady big-income beneficiaries at random in its text, outside its list, giving no reason for this deviation. The list, confined to then living people, did not name all the big post-1918 fortunes, although here and there some persons who had
recently died were mentioned. Some such fortunes omitted from the Fortune list will be mentioned further along.
Before scanning the Fortune list and then noting qualifications of it, the reader will be better prepared if he ponders over the tables in Appendix A that provide a broad statistical background since 1940 on the larger incomes and lay the ground for some incisive observations. In the upper brackets at least, these income recipients abstractly impaled like skeletal insects in the tables are unquestionably included among Lampman's 1. 6 per cent of adults that compose American wealth-holders. No doubt the Fortune list in its entirety, with some additions to be supplied, represents a part of the moneyed elite of the Lampman higher strata. But in the group of Appendix A incomes below $100,000 or so, many are only those of potential wealth-holders--for the simple reason that they are from salaries.
Property and Politics
Nonetheless the varying totals shown in Appendix A of incomes in excess of $25,000--numbering 49,806 in 1940 and 626,997 in 1961--certainly represent the cream of the take in the American svstem. This is not a large group and, in relation to a population of nearly 260 million, of which more than half are adults, it is not any different in relative size from the small group of tight-fisted landowners found in Latin American countries or from the Communist Party of Soviet Russia.
In order to participate in politics in the Soviet Union one must be a member of the Communist Party.
