The sign
probably
meant that the good Lord wanted him to stay out of the wicked stock market and stick to healthy, whole-wheat food.
Lundberg - The-Rich-and-the-Super-Rich-by-Ferdinand-Lundberg
He established the Cullen Foundation to which be assigned $160 million, say standard sources; 37 but the Foundation Directory, 1964, accords the foundation a net worth of only $2,434,610 at the end of 1961.
Possibly the estate was still being processed.
Cullen also allotted more than $30 million to the University of Houston, specializing in vocational training, there to establish a memorial for his only son, and at least $20 million more to hospitals and the like.
Cullen, a man of little schooling, son of a cattleman, went to work at age twelve and eventually emerged as a cotton broker. He went into oil in 1917 and at various times was closely associated with Rockefeller and Mellon companies. His personal instrument was the Quintana Petroleum Corporation, and with it be found many big new fields. But he followed the lead of someone else in applying scientific methods to the discovery of oil.
Like H. L. Hunt he believed the American public needed instruction in political basics, and in 1951 be bought the Liberty Network of radio stations with outlets in thirty-eight states, to facilitate the flow of cracker-barrel interpretations of the Constitution.
Cullen was one of the earliest of the ultra-conservatives. He was against the New Deal from the beginning. Like Herbert Spencer, he was opposed to all government regulation, was opposed to the Marshall Plan, to the United Nations, to unionization and to the lowering of tariffs. In this latter respect an inner contradiction shows in his theory of self-effacing government, for tariffs are a government regulatory device in favor of domestic producers. Cullen's true position, like that of almost all the anti-regulation business people, is that he opposed government regulation that in any way might conceivably sandpaper business profits but he joyfully favored any sort of government
regulation, interference, intrusion, intervention, support or action if it was price-raising or promised to be directly profitable to business. This is the actual principle governing the pecuniary man, who is at bottom an unconscious anarchist, hostile to all government not his personal instrument.
Back in the 1930's Cullen organized what was known as the Texas Regulars, still the hard core of the ultra-conservative movement. In 1948 he supported the Dixiecrats, but in 1952 he led the revolt in the Texas Republican delegation against Taft in order to get on the ground floor with Eisenhower. He gave money lavishly in politics to any counter-clockwise movement.
Cullen, like H. L. Hunt, took his acquisition of wealth as a sign from on high that he possessed unique virtue, that he was of the elect, a prophet to lead the boobs to the Promised Land. His sudden riches not only gave him an excess of confidence but a feeling of omniscience and clairvoyance in all human affairs. Although he had never studied these matters, was indeed like Hunt anti-intellectual, he thought he knew all about foreign affairs, world politics, history and, above all else, the needs of the domestic political economy. These were quite simple: What was needed was a general application of the Horatio Alger philosophy within a simple Spencerian setting, each individual striving upward toward the kindly light of money with no intervention from government either to block or assist (except established businessmen).
In seeing the businessman as omniscient, Cullen was simply echoing an early American point of view. It was often said by the bullying Major Henry Lee Higginson, founder of the Boston banking firm of Lee Higginson and Company, that "Any well- trained businessman is wiser than the Congress and the Executive. " 38 And, if one gives full value to the operative word "well-trained," the major may have had an arguable point of view even though some fastidious minds might consider it faint praise to concede anyone more wisdom than Congress. But businessmen rarely limit omniscience to the well-trained and tend to feel that anyone who has made some money has given ample proof of his general wisdom.
Although a simple but forceful mentality such as Cullen's may evoke uneasy smiles among the more knowledgeable, it must not be forgotten that such men, by reason of their ability to put up money, have much to say in politics. Arrogating to themselves the role of supreme legislators, they use formal legislators, chosen in the catch-as-catch-can political process, as their cat's paws, mainly to block socially necessary measures. Cullen and his cracker-barrel colleagues placed their distinctive stamp on the internal colonialist politics of Texas, and they had more than a little to do with returning the Republican Party to power in 1952-60. They are always working at it, with money and main, and will never be satisfied until they install the straight Coolidge-McKinley ticket. They keep the lambent glow of the horse-and-buggy age bright in the thermonuclear-missile-automation-computer age.
James A. Chapman
Still another oil baron whose fortune reached awesome dimensions was James A. Chapman of Tulsa, Oklahoma. Chapman died in 1966, aged eighty-five, leaving about $100 million, most of it to the University of Tulsa, the balance to other educational and medical institutions.
Self-floated with $700 in 1907 on a tide of oil, Chapman was rated by insiders as Oklahoma's most successful oil operator. During his lifetime Chapman, said his attorneys, had secretly "given away" more than $75 million. His will made no provision for his wife and conveyed only $1,000 to his forty-seven-year-old son because, as it noted, "adequate provisions" had already been made for them (New York Times, October 15, 1966; 1:1).
De Golyer: A Man for Most Seasons
But not all of the oil men are cracker-barrel fugitives from textbooks, it is gratifying to report. Some are impressive figures and would unquestionably have risen to prominence in any socio-political system. One such was Everette Lee De Golyer (1886-1956), of remote French descent, who compares with most oil hunters as does a Stradivarius with a banjo.
De Golyer, a geologist and a geophysicist, was many times a millionaire, and is indeed credited with bringing applied geophysics to the United States. He is known in scientific circles, where he was very much at home, as "The Father of American Geophysics. " To De Golyer more than to any other one man goes the credit for the discovery of so much underground oil since 1910. Without De Golyer--or some counterpart--the world oil supply would unquestionably be much lower than it is today. For the oil industry from the beginning was very wasteful, haphazard and slapdash, full of apprentice barbers performing as surgeons.
De Golyer's father was a mineral prospector and De Golyer, born in a Kansas sod hut, initially took an interest along these lines. 'He joined the Wyoming Geological Survey in 1906 and later worked with it in Colorado and Montana. But soon tiring of rule-of- thumb methods, he enrolled in the University of Oklahoma where he was graduated in 1911 at the age of twenty-five. In the summers he worked as a field geologist and in 1909 joined the Mexican Eagle Oil Company, then owned by British interests and later, sold to Royal Dutch Shell.
On his first trip out in the area near Tampico, later known as "The Golden Lane," relocating the search in accordance with his knowledge of structural trends, he brought in Potrero del Llano No. 4 well, one of the most spectacular gushers of all time. This well produced 110,000 barrels daily and cumulatively produced more than 100 million barrels. De Golyer was promoted to chief geologist and then chief of the land department.
Some sources say he was a millionaire before finishing college; others relate that Mexican Eagle put him on a salary of $500 a month--fairly good money in 1909--while he went to school. He continued with the company in a consultative capacity until 1919, although he left it officially in 1914 to open his own offices as a consulting engineer to the petroleum industry.
Called to England in 1918 to participate in the sale of Mexican Eagle to Royal Dutch Shell, he was then backed by Lord Cowdray of Mexican Eagle to form the Amerada Petroleum Corporation, of which he was made vice president and general manager, then president and finally chairman. He retired from highly successful Amerada in 1932. He continued, however, with the Geophysical Research Corporation, which discovered oil fields by scientific methods for the big oil companies. He also formed Core Laboratories, Inc. , and the Atlatl Royalty Corporation to carry on oil discovery and ownership.
De Golyer's method was to apply the knowledge of a trained, scientific mind nourished widely in the theoretical literature about the causal processes of earth formations. He picked up some of his most valuable insights by applying early European theory to his work. The presence of underground salt domes is now known to predict the presence of oil. How are salt domes formed? Then prevalent theory held them to be of volcanic origin, the result of the expansion of growing salt crystals or deposits from rising columns of brine from deep sources. De Golyer came to accept the European theory that they are formed by plastic flow, the salt having flowed owing to the weight of overhanging rocks. Once the salt dome has been found, the oil prospector must determine the formation of the underlying rocks in order to get through. All this
careful inquiry was quite out of harmony with the practical, common-sense, feet-on-the- ground, down-to-earth, no-nonsense, rule-of-thumb guesswork in the field by the boys who had just recently left the cracker barrel.
De Golyer implemented his insights by introducing the use of the seismograph, gravimeter, torsion balance, electro-magnetic surveys and explosives to send shock waves through the varieties of underground formations, thereby determining their texture. Using these appliances he found field after rich field in Texas, Oklahoma and the Gulf region. Cullen and others, sweating for money, copied his methods, which are now standard all over the world in oil prospecting.
Basically a scientist, a student and a scholar, De Golyer was widely read, not only in his technical specialty but in the literature of the Southwest. He published a long, impressive list of original scientific papers and wrote about the history and personalities of the Southwest. From a money-making point of view he wasted tens of millions of dollars of time reading and writing. He collected priceless rare books--on the Southwest, on geology and geophysics and on scientific method and the history of science--and left them, a treasure, to the University of Oklahoma, the University of Texas and other institutions. He established the De Golyer Foundation to add to these valuable collections of books.
In the late 1940's, hearing that the Saturday Review of Literature was in financial straits, he came forward to give it a lift and was made chairman of the board. De Golyer served on literally scores of national and local cultural and scientific bodies and boards, lectured to serious audiences at M. I. T. and Princeton and served in 1940 as Distinguished Professor of Geology at the University of Texas. He held well-deserved honorary degrees from many American and foreign universities and was frequently decorated.
Although a moderate Republican, he served willingly under Franklin D. Roosevelt as oil adviser to the New Deal, later in the war, and as chief of the technical mission at the Teheran Conference. The number of his trusteeships, directorships and organization memberships was far too extensive to list here.
He is memorialized by the National Academy of Science (of which he was a Fellow) in Volume XXXIII of its Biographical Memoirs together with Thomas Hunt Morgan, the biologist; Robert A. Millikan, the physicist; Lewis M. Terman, the psychologist; and Josiah Royce, the philosopher. He was clearly much more than an oil prospector, businessman or capitalist. The Memoirs give a bibliography of his writings from 1912 onward, encompassing fifteen pages of titles.
After an illness of six years De Golyer shot himself at the age of seventy. 39
What De Golyer was worth is less interesting than what he could have been worth had he devoted himself solely to accumulating wealth. There is no doubt be could have been worth billions had he been interested in nailing down for himself every likely claim. As it was, his retained wealth was estimated at $10 million to $100 million at his death, a wide range. 40
Looking on his fellow oilmen with considerable reserve, De Golyer "frequently remarked that the talent for making money can imply a lack of talent for leading a useful life. "41 De Golyer certainly did not suffer from this deficiency.
But like some of the other oil men, De Golyer did believe in luck. "I hate to tell you," he once said, "how many times I've made money by going against my own judgment . "42 On this same theme realistic R. E. Smith, one of the Fortune listees, said, "My West Texas oil field was solely luck. It has 38 million barrels in reserve and cost me $5 an acre. It was the same with Hugh Roy Cullen. The first money he made was on some
land he didn't want; the oil company kept the 'A' acreage. They gave him some 'D' property--the lowest grade--as consolation and he hit. The company never did hit anything on their 'A' property. The lesson you learn as you get older is that it's luck. " Again: "The fortune of Matilda Geddings Gray," explained a Louisianian, "came mostly from her father. He made it on a herd of cattle; found an oil well under every cow. "43
Without some element of luck, no matter how hardworking, ingenious, greedy or unscrupulous the protagonist, nobody ever made much money. The general luck of the nineteenth century entrepreneurs was to have a great deal of new technology thrust under their noses--steam engines, steel-making processes imported from abroad, internal combustion engines, new electrical apparatus and the like. Few of the entrepreneurs participated in the creation of any of this but they did know how to convert it under lucky circumstances into titles of extravagant ownership--in their own names.
Raskob of Du Pont
John J. Raskob (1879-1950), one of the upper executives of the General Motors Corporation, prepared with a knowledge of stenography, got his start by becoming secretary to wealthy Pierre S. du Pont. Raskob's big coup some years later was to suggest General Motors as a likely investment for surplus Du Pont money, and he thereafter alternated risingly lucrative employment with General Motors and E. I. du Pont de Nemours and Company. The leading figure in trying to make Al Smith president in 1928 and the Democratic Party a replica of the Republican, he was made Private Chamberlain to the Pope. He founded the tax-shy Raskob Foundation for Catholic Activities in 1945; it had assets of $29,281,060 in 1960 and four Raskob sons among its officers. On his death he left his wife and each of ten surviving children trust funds of unspecified amounts. 44 One presumes they were generously proportioned. As Raskob was a pecuniary man to his fingertips with no other apparent interest in his life, his fortune before he started redeploying it may well have exceeded $75 or $100 million.
William S. Knudsen
William S. Knudsen (1879-1948), former president of the General Motors Corporation and Director General of the Office of Production Management during the war, had one of the "ten biggest incomes in the country"45 but the expanse of his holdings at the end is fogged. Standard reference media, including the New York Times, give no accounting of his estate, which was presumably disposed of before his death; he established no foundation, left three daughters and one son, all presumably financially soigne? .
A Note on Probate
There is nothing conclusive about the probate of an estate, In his lifetime a wealthy man might make tax-free dispositions to foundations or other endowments (which usually show on the record) or he might make regular low-tax distributions to members of his family. At a gift-tax cost of $325,700 as of 1965, an unmarried person could transfer $1 million to an individual. If he did this every year for twenty-five years to five persons, thus transferring $125 million cumulatively, he would have to pay $40,712,500 additional in taxes, a tidy sum. If he waited to bequeath $165 million at death to individuals, the tax bite would be $125,438,200, or about $85 million more than by the installment-transfer procedure.
But by halving his individual gifts each year and putting the other half of the money into a tax-free foundation (which his heirs could play with as it suited their tastes) he would pull his total transfer taxes down to a low, low $6,119,375 or a little less than 4
per cent on $165 million. His saving over the first procedure, for the benefit of his heirs and their foundation, would be $34-plus million; over the second procedure, a little under $119 million.
Delightful though this prospect is, if the man is married he can make the original transfer of $125 million solely to individuals at only double the cost of 4 per cent, paying a little more than $12 million, under special provisions for estate division written into the law in 1948. His saving here over the first direct transfer is $28-plus million, which he can slam into a foundation for so much extra gravy. Whoever said we didn't have a thoughtful Congress to write such thoughtful laws? In the meantime, newspapers and "spokesmen"--that is, paid propagandists--go about talking loosely about high taxes on the big estates. When one gets down to the fine print, those high taxes just aren't there.
A man might, indeed, die stony broke and still have ruled over a large fortune if he had concentrated a goodly sum in a foundation. As head of the foundation he would naturally set himself a substantial salary. He would not, legally, own anything; he'd just control the assets of the foundation by charter and the disposition of its income. Until he drew his last breath, even though he was only on straight salary, he'd have corporate, political and other power through his foundation as well as the satisfaction of knowing that he hadn't helped the rustics in Congress with their eternal problem of budget balancing. So the mere fact that a man dies without leaving traces of large assets really proves nothing.
Jesse H. Jones
Jesse H. Jones (1874-1956) was for many years a power in the land and a top-level, hard-bitten wheeler-dealer. A banker and politician based in Houston where he owned the Chronicle, banks, buildings and other properties as well as properties in Dallas and Fort Worth. Jones became chairman of the Reconstruction Finance Corporation and Secretary of Commerce under Roosevelt II. As chairman of the RFC he is said to have made the decisions to lend more money than any other man in history, getting himself involved, too, with some of the borrowers. His father was a Tennessee tobacco planter, and young Jones came to Dallas at age twenty to find a place under an uncle in the lumber business. His estate at death was only $8,765,302,46 but he had earlier made large distributions to children and a foundation, The Houston Endowment (1937), which in 1962 had assets of $43,939,169 and had just made grants of $7,249,765.
Amon G. Carter: Texas Ueber Alles
Amon G. Carter (1879-1955), son of a blacksmith, went to work at age twelve selling newspapers a? la Horatio Alger, graduated into selling photographs and then, in 1904, into the not-so-great game of advertising. In 1906 he became advertising manager for the Fort Worth Star and by 1923 was president and publisher of the merged Star- Telegram. He also weaseled into radio and television but made his biggest money in oil wildcatting. Under his ownership was drilled the discovery well of the big pool in the Wasson lease in Gaines and Yoakum counties, Texas. He sold out there for $16. 5 million and put the money into the Amon G. Carter Foundation, which at the end of 1962 had total assets of $32,519,275 (Foundation Directory, 1964). An aviation enthusiast, he was a founder of American Airlines and a major political influence in bringing various military aviation installations, bomber plants and missile enterprises to Texas. He is credited with using his influence to make Texas second only to California as an aviation center. He was a noisy Fort Worth and Texas booster and was said hyperbolically to own all of Fort Worth. He left two daughters, a son, the Star- Telegram, various pregnant properties and the foundation. No probate of his will was published in standard reference media available to this inquirer but if one assumes only
half his wealth was left in the foundation he was worth more than $65 million at some time in his later life, probably a bit more. 47
William H. Danforth: Apostle of Purina
William H. Danforth (1870-1955) of all American millionaires probably most deserves the much-abused characterization of philanthropist. For Danforth genuinely liked people in general and was obviously stimulated by them.
Born in the backlands of Missouri, Danforth went to St. Louis at fourteen to go to school and remained to be graduated from Washington University. With $4,000 borrowed from his father he went into a horse-feed partnership with two men in 1894: the Robinson-Danforth Commission Company. A natural salesman, Danforth traveled through the Middle West selling Purina Horse Feed in a folksy way ("Purina Feed will make your horse laugh," one of thousands of bucolic Danforth slogans) and buying ingredients from farmers. The day after one of the partners sold out to Danforth in 1896, the business already booming, a tornado blew down their sizeable plant. With an unsecured bank loan of $25,000 he rebuilt, and the business extended into all varieties of farm feeds Under the Purina label. It also went into the production of whole-wheat cereals for human consumption (the new health fad) under the familiar checkerboard label. This latter was adopted from a farmer's shirt design and for some reason had such an hypnotic effect on customers that it was widely infringed but successfully defended in the courts.
Danforth was quite spontaneously an enthusiastic extroverted Christian, a YMCA man (he served in France as a YMCA secretary in World War I), a believer in the social gospel and a true, corn-ball do-gooder. He seemed to feel that good will, good humor, enthusiasm and energy were all that were needed to put the world to rights. A Congregationalist Sunday School teacher and superintendent, he believed in helping young people help themselves. He gave thousands to finance camping trips and outings in the woods and on the shores for the young. He was a pioneer in helping finance mostly somewhat bucolic college educations, for which in 1927 he established the Danforth Foundation (assets in 1962: $125,694,089, mainly in Ralston Purina stock). Danforth believed in college as much as he believed in the Bible.
Danforth ran his business pretty much like a folksy husking bee with plenty of homespun high jinks. He required his employees to exercise together and sing together, and was the originator of widely copied employee welfare programs such as contests, office messages and personal items, employee theatricals, awards, parties, picnics, square dances and general one-big-happy-family stuff. He produced mottoes tirelessly and wrote inspirational books and pamphlets in the school of Dr. Frank Crane, Elbert Hubbard and Orison Swett Marden.
Everybody around Danforth was caught up in a blizzard of activity, all happy Christian soldiers marching onward and upward and holding forth the holy grail of Purina. Somehow, money filtered artlessly through the whole like molasses in a bran mash. Danforth unquestionably believed in everything he did. There was probably not an insincere bone in his body. And the good Lord just made that cash register ring, ring, ring.
Danforth was extremely wealthy by 1929, when Jehovah suddenly signaled that he was unaccountably displeased. All of Danforth's holdings were wiped out in the stock market crash with the exception of his ownership of Ralston Purina.
The sign probably meant that the good Lord wanted him to stay out of the wicked stock market and stick to healthy, whole-wheat food.
After the crash, business for Purina slacked off so badly that Danforth, depressed, had to lay off old employees. As grain prices continued to tumble Danforth found that he was constantly having to sell for less than he paid for the raw materials and labor. He was, in short, going broke in a big way. Satan was in command.
But the Lord had not forsaken His earnest worker. In 1932 Danforth relinquished control of the business to his son Donald, recently out of sleek Princeton University and in his father's estimation not much of a businessman. But the boy's mother spoke up staunchly on his behalf, Donald took hold and, giving the business the old college try, he made good in such a way as to amaze the elder. In the general inflation, sales were whirled tip from $19 million in 1932 under Donald's shrewd Ivy League ministrations to $400 million in 1956, when Ralston Purina chugged into eighty-seventh place on Fortune's list of the mightiest corporations. In the distance such giants as AT&T, General Motors and Standard Oil of New Jersey could dimly hear the corn-belt juggernaut slowly creeping up on them.
Danforth himself was a "natural" in a world of counterfeits. Personally likeable and uncomplicated in his views, he was simple-minded and nai? ve and perhaps just lucky never to fall into the sights of the financial sharpshooters all around him. He took no visible interest in politics. His early heroes were Hill, Harriman, Rockefeller, Astor, McCormick, Carnegie and their like, whom he saw as builders of the nation, Daniel Boones of the dollar. He longed to emulate them. He always sought out the business great in an effort to learn their "secrets. " He looked up John Wanamaker, whom he admired both as a businessman and as a Christian layman. (In Danforth's view "businessman" was just about synonymous with "Christian. " Jesus was after all, as it has been said, a salesman. Danforth would gladly have given him a job selling Purina. ) Once Danforth followed Henry M. Flagler, the Standard Oil tycoon and Florida promoter, around a golf course in Florida, pencil and notebook in hand, and asked the great man many questions, to which he was graciously given answers. Danforth also sought out Henry Ford for prayerful discussions about philanthropy.
As far as the record shows, Danforth (unlike many of his prominent business contemporaries) never engaged in any shady practices, was never involved in any swindles, was never the defendant on criminal charges and was never accused of exploiting his workers. Nor was he, it seems, ever seriously criticized, knocked, called to account or rebuffed in good times or bad. For a portrait of the American capitalist as an extremely good, wholesome, honestly Christian earnest outgoing do-gooder one must turn to William H. Danforth,
The name of Ralston got into the Ralston Purina label in a curious way. Early in this century there was a Dr. Ralston who established health-food clubs around the country. Danforth, in order to get into the human food market with his whole-wheat cereals made a money-for-name tie-in with the good doctor and Ralston Purina was off on the heels of Quaker Oats and Kellogg's Corn Flakes. Health foods, big money and religion all gathered at the shore of the mighty Mississippi river. 48
New-Old Fortunes
Although all these noninherited fortunes have been treated as new, they are new only in a relative sense. Almost all the big individual noninherited fortunes mentioned in this inquiry date back before World War II and, indeed, the bulk of them date before 1929. Most of the Texas oil fortunes were founded between 1910 and 1925. The General Motors fortunes were all in foetal existence in the 1920's. Although the names of the owners are less familiar than Rockefeller, Morgan and Vanderbilt, every single one was already rich on the eve of Pearl Harbor and nearly all were rich in 1929.
Many clearly date from before World War I--Danforth, Moody, Jones, Getty.
Unless processes are going on inaccessible to inquiry it can be said that big new individual property accumulations are now taking place, if at all, at a decidedly diminished pace. And this is understandable in view of the entrenched position established by hereditary wealth. No man, however puissant, can come along and simply say "move over" to the Standard Oil Company of New Jersey, E. 1. du Pont de Nemours and Company or dozens of similar enterprises, Nor can such a puissant man by any method yet disclosed take them over as his own.
Whirling Dervishes of the Mass Media
Although the barrel has been scraped in the search for new or nonhereditary wealth on the American scene, and just about every likely candidate appears to have been noticed, there can be no guarantee that some big "sleeper" has not been overlooked. We have ignored, for reasons of space, stuff ranging from $25 to $75 million.
Most of the names of new fortune-builders put before the public are those of men who are little more than speculative entrepreneurs backed by banks or some syndicate. As long as these whirling dervishes stand upright they receive rapt attention. But most of them vanish in a cloud of debt and tears to become skeletons in the Death Valley of newspaper files.
Newspapers are interested in such worthies for at least two reasons:
1. They want new names and faces to present to the public, and many people as well as editors seem to find it thrilling to read of some immigrant who arrived in this country with five dollars and went to work as a rag picker , quietly saved his pennies, gradually bought real estate and finally emerged as the greatest real-estate tycoon of all time. Or so they say until the banks start calling loans.
2. They cite these putative geniuses of pecuniary derring-do in order to prove that anyone who is willing to work hard, live right and tend to business can make at least a million and probably more in the United States--the American dream. A curious feature of this thesis is that the money-cult editors and writers who expound it are themselves not notably pecunious, are apparently unable to apply their own profound insight.
In the 1920's, in the aftermath of World War I, names to conjure with in the press were William C. Durant, founder of General Motors and possessor of a fresh fortune several times in his life; Jesse L. Livermore; Arthur W. Cutten; Frank E. Bliss, "The Silver Fox of Wall Street"; Benjamin Block; Michael J. Meehan; Joseph E. Higgins; Louis W. Zimmerman; George Breen; and Harry Content. 49 All went down the financial drain without a gurgle.
Arthur W. Cutten, as big as they used to be verbally blown up, died in 1936 while under indictment for income-tax evasion. His estate of $350,000, once reputed to be worth $100 million (press reports of the holdings of market operators are usually vastly exaggerated, thus attracting more suckers), had tax liens against it of $644,000 and was confiscated. 50 Rumors that he had funds in Canada, where he was born, were checked without affirmative result.
Cutten, for years a drab bookkeeper in a Chicago brokerage house, in the early 1920's became a speculator-manipulator in the grain pits. He finally had perhaps a few million drably to his credit and drably came to New York in 1925 at the age of fifty-four in search of drab new puddles to conquer, He engaged in buying and bulling stocks, assisted by hordes of even drabber men and women who bought anything they heard Bookkeeper Cutten was buying. Distributing to the suckers as the top he had set was approached, Cutten pocketed the profits. This process was endlessly repeated and would no doubt still be going on if the "Moment of Truth" had not come in October, 1929. Cutten was, with poetic justice, one of the many picadors and bandilleros whom the
dying bull managed to gore fatally before expiring. His career may be summarized as a transit from bookkeeper to gambler to nothing. There is no hard evidence that I can find that Cutten was ever worth $100 million, $50 million or even $10 million net; he was carried by the banks.
There were, too, in those salad days, high-flying dervishes like Samuel Insull, Charles E. Mitchell, Ivar Kreuger, Albert Wiggin, Howard Hopson, Edward Doherty--all men with complex Rube Goldberg schemes afoot and in the end all speculative flat tires, personally as undistinguished as any pushcart peddler. But in their day the newspapers ecstasized over them as proof positive that under the great American system of godly democracy any right-thinking, right-living man who had faith in the United States should, could and would acquire a fortune.
The biggest flops of all, as one would expect, were those men widely regarded as the soundest. The superlatively sound men of the time were Oris P. and Mantis J. Van Sweringen of Cleveland, presented in the press as masters of railroading (although they were actually two obscure provincial real estate brokers). With the backing of the J. P. Morgan bloc the Van Sweringens busily floated vast railroad holding companies, busily issued watery securities, busily merged, unmerged and submerged railroads and busily carried on general financial wildcatting in search of profit. Their bubble burst in the depression, removing two geniuses of bank-press creation from the scene.
Just how big the Van Sweringens were considered in the 1920's may be seen in the fact that they were listed in 1930 by James W. Gerard, former ambassador to Germany, as one of the sixty-four shoguns who "ruled the United States. " President Herbert C. Hoover was, correctly, not on this list, which was headed by John D. Rockefeller I, Andrew W. Mellon, J. P. Morgan II, George F. Baker, John D. Ryan (copper), Henry Ford I, seven Du Ponts of high dynastic numbering, the five Fisher brothers of Detroit ("Body by Fisher"), A. P. Giannini, Daniel Guggenheim, a few corporation executives and some dubious elements no doubt included by the diplomatic Gerard to be complimentary: William Green, Matthew Woll, Roy W. Howard, William Randolph Hearst and, of all people, Adolph Zukor and Harry F. Warner, the film moguls.
But although one might quarrel with the catholicity of Gerard's choices, he did adhere to the theory, bitterly denied by all party-liners of the American myth, that some sort of dimly visible shogunate lies behind major trends in American policy. The country was not being run from Washington by duly elected representatives of the people, Gerard sensed, but by a group of remote-control drivers, masters of the cash register. Its ringing was, to them, the Liberty Bell, signaling their own freedom from want.
One could go on for many pages reviewing the lists of the financial also-rans, a fevered crowd-all duly celebrated in their day. In order to bring things down to date, we may notice in parting the name of William J. Zeckendorf, the big builder, operator and general juggler of office buildings and hotel properties, since World War II given much press attention as an authentic coast-to-coast tycoon. The Zeckendorf story, a reader's thriller for many years, may be now told very briefly: His enterprise went decisively bankrupt in 1965 as the banks called the loans, a process irreverently known as "pulling the plug. "51
Fallacious Logic in Media Celebrations
The notion that new fortunes are being made right and left in the United States, selectively documented from time to time by Fortune and the Wall Street Journal, may now be looked at briefly. In general, these publications perpetrate several fallacies in logic in supporting this thesis, notably those of untypical instances and of neglected aspect.
Fortune (January, 1952) presented a survey titled "The New Rich," cueing it in with the substatement that "A lot of enterprisers you probably never heard of are proving you can still strike it rich in America. "
"Since 1945," said Fortune, "a brand-new crop of rich men has risen in the U. S. Mostly shirt-sleeved enterprisers who started from scratch, they are hardly more than well off compared to the 'Pittsburgh millionaires' of the nineteenth century or the 'Detroit millionaires' of the Twenties. What makes them spectacular is their profusion. Every state in the Union has them by the hundreds, and their collective wealth, glittering from coast to coast, has given the whole country a pleasant golden hue. "
(I find it difficult to believe that any responsible writer of such a line is not being exaggeratedly ironic. )
"They are the core of that fast-growing group whose 15,000-odd members report incomes between $100,000 and $300,000 a year; their affluence is neither freakish nor unstable. Right behind them, ready to step into their shoes, are roughly 50,000 individuals who in 1948 reported incomes of $50,000 to $100,000 a year, and 175,000 who reported $25,000 to $50,000. " Fortune takes no account of the carefully established fact that most of these incomes are old-line asset-incomes, not the incomes of new men.
"Nationally their presence is recorded in the 400,000 Cadillacs sold since 1945, the 37,000 pleasure craft registered since 1946, the doubling of Chris-Craft's 1951 big-boat sales (forty-two feet and up), and the introduction, under the pressure of demand, of a sixty-two-footer, priced at $125,000. A score of the splashier restaurants have become fabulously successful as a result of their patronage; their private planes, as many as two hundred at a time, fly in for the bigger Texas football games; and their dexterity with an expense account since pleasures and business are bard to sort out in wholly owned enterprises, gives them a spending power far above others making the same amounts in straight salary. "
Fortune soberly names some of the new paragons as follows:
William Mullis (frozen shrimp, Georgia); Jeno Paulucci (frozen chop suey, Minnesota); Sam Joachim (burlap bags, Texas); Boss Sams (church furniture, Texas); Abe Katz (plastic toys, New York); Ralph Stolkin (punchboards, oil, cattle, movies, TV, Chicago, valued by Fortune at $35 to $50 million with no source evidence cited); Vern Schield (power shovels, Iowa); Dr. Earl Carpenter and John C. Snyder (baby beds, Wisconsin); Winston Smillie (floor cleaners, Missouri); Malcolm Lee McLeod (timber, South Carolina); Milton Brucker (plastics, California); Harry E. Umphrey (French fried potatoes, Maine); Hugh B. Williams (earth-boring machines, Texas); "Smiling Jim" Moran, "The Courtesy Man" (auto dealer, Illinois); Sam Eig (real estate, Maryland); Kenneth Aldred Spencer (chemicals, Kansas); Herman Delmos (Breezy) Wynn (sporting goods, Georgia); Fred Hervey (supermarkets; restaurants; bog farms; mayor of El Paso, Texas).
All these are instances, says Fortune, of "individual success. " What they all are, in fact, are fairly run-of-the-mill marginal businessmen, hailed by Fortune as the new rich. No balance sheets are revealed, no listing of bank loans. How many will emerge with a substantial net worth is not shown, nor how many will go the way of Zeckendorf and thousands of others.
In many cases, especially where annual sales are cited, one can make certain hard deductions. The baby-bed makers, said Fortune, had run their sales up to a million dollars a year. Now, some of the most successful U. S. enterprises regularly have around 14 per cent profits on sales, an envied figure even if sometimes exceeded. If we gratuitously give this superb percentage to the baby-bed makers they were making
$140,000 a year. Split two ways this is $70,000, which after taxes leaves less. Allowing each entrepreneur to live very frugally, let us say he saves $50,000 a year. In ten years he will then be worth $500,000, in twenty years $1 million. The point is that few small businesses keep up this way. They run into competition and other vicissitudes, mostly from larger enterprises.
But Kenneth Aldred Spencer is doing well, says Fortune. "Besides a 850,000 salary, in 1950 he received $377,000 in dividends on his 236,000 shares of common stock and realized $118,000 through sale of the purchase rights of a new issue. 'Smiling Jim' Moran has set up a $1,450,000 trust fund for the children. " Not too bad but, really, chicken feed.
But these simple annals of the merely well-to-do, whom we always have with us, hardly prove that new fortunes are in the offing. Successful business entrepreneurs though all these men may be, one can scarcely regard them as "the new rich. " They are small fish in a pond full of large fish. And the odds against any of them becoming big fish--authentic barracudas--are enormous.
As instances of the ability to make new fortunes on the American scene, we must pronounce a Scotch verdict: not proven.
Where the reportorial fallacy enters in is the citation only of these minor winners, no losers. But of the many who answer the siren call to riches few are chosen, as the record of bankruptcies shows. Business failures in the United States, according to annual reports by Dun & Bradstreet, national credit raters, have in most years since 1950 exceeded 10,000 and in some years 15,000. Between 1950 and 1953 they ranged between 7,611 and 9,162 and have not to date fallen below 10,000. In 1963 they totaled 14,374 with total liabilities of $1. 3 billion, the value of a largish super-corporation. For every businessman in a given year who makes enough of a splash to come to the attention of Fortune's editors, about 10,000 split a got trying and cough blood in the bankruptcy court. If it weren't committed to dispensing sunshine, Fortune could write a melancholy article every year on business failures and issue a thick supplementary directory merely giving names and addresses.
Nor do these figures show the panorama in its full sweep. The special monograph on small business of the Temporary National Economic Committee, a joint Senate and Securities and Exchange Commission operation, in 1939 revealed that "in the first thirty-nine years of this century, 19 million enterprises opened their doors and 16 million closed them. " This was a four-decade failure rate of 85 per cent.
Henry Thoreau, writing in Walden in the mid-nineteenth century, concluded that the failure rate of businesses in his day was 97 per cent.
The Failure System
In business, under the American system, each year the failures exceed the new successes by a very, very, very wide margin. In business, under the American system, hundreds of thousands more have failed, generation after generation, than the few who have succeeded. If we are to judge by the preponderance of individual successes over failures or vice versa, then the American system, businesswise, is a record of steady, almost unrelieved failure. It has failure literally built into it. It is indeed a near-miracle, front page news, when anyone really makes it. This judicious observation sounds paradoxical only because it contradicts conventional propaganda.
As it is observed by Professor Paul A. Samuelson of M. I. T. in his standard textbook, Economics (McGraw-Hill, N. Y. , 7th edition, 1967, p. 76), the average life expectancy of an American business is six (6) years!
While it is true that no particular blame attaches to anyone for the high rate of small business mortality, blame can be leveled for the misleading propaganda about the business system. By the one-sided stressing by propaganda organs of the few successes, many are led to lose their hard-earned savings in establishing new businesses. Sound advice to 85 to 95 per cent of Americans contemplating opening their own businesses would, in the light of the facts, simply be: "Don't. "
The belief of a wide public that it can succeed in business supplies a lucrative crop of suckers for established equipment suppliers, usually big corporations. Banks, too, participate in this merry game by making loans against resalable equipment. The same fixtures are sold and resold to a long string of losers incited into action by florid accounts of success in the Wall Street Journal, Fortune and other media.
Today, the new man going into business, like the individual consumer, does not realize that all the possibilities in almost every situation have been determined down to decimal places by batteries of computers and the results have been evaluated by staffs of exceedingly acute experts. In pitting himself against these computers and highly paid experts, the ordinary man is very much like an amateur chess player who elects to pit his skill against a consulting collection of chess masters. His doom is virtually sealed with his very first move.
Fortune's valedictory for its inspiring group of minor successes was that "The new rich symbolize the abundant health of the U. S. economy, for they have been pushed up by a general prosperity below. A fair guess is that money in the hands of millions at the base will keep them at the summit and in the decade ahead swell their number by the thousands. "
More Fuel from theWall Street Journal
The editors of the Wall Street Journal in 1962 put somewhat similar findings about
thirteen men and one woman into the form of a book. 52
The foreword by Warren H. Phillips, managing editor, makes it clear that the presentation is designed to prove something: that it is as easy as it ever was to make a fortune in the American economy, that it is desirable to do so and that fortunes are being made right and left. Like the Fortune group of 1952 the Journal's group of 1962 embraced only modest fortunes, men who might be called the "poor man's millionaires. " They did not pretend to be like the all-time heavyweights of the Fortune 1957 list.
As Mr. Phillips observed, "It is often said that today it is infinitely more difficult to amass great wealth than during earlier periods in the nation's history; that the nation's economy has matured, and the rags-to-riches legend belongs to its period of youthful growth; that business opportunity today is highly limited, not only by high taxes, but by stiffer competition from large corporations and by pronounced restrictions based on education, race, religion, sex and age.
"The evidence sharply contradicts this impression. " 53
The only "evidence" Mr. Phillips cites is the number of postwar million-dollar incomes that we have already examined, incomes from established assets.
"All such statistics suggest that the opportunities for making fortunes in this country are as wide today as in any earlier period of history. " 54
The statistics on large incomes provide no evidence whatever for concluding that new fortunes are being made or that there are opportunities for making fortunes. Without the identities of such large income receivers one cannot tell whether the income is from an old or a new fortune, from asset-wealth or from earnings in the form of salaries or commissions.
Cullen, a man of little schooling, son of a cattleman, went to work at age twelve and eventually emerged as a cotton broker. He went into oil in 1917 and at various times was closely associated with Rockefeller and Mellon companies. His personal instrument was the Quintana Petroleum Corporation, and with it be found many big new fields. But he followed the lead of someone else in applying scientific methods to the discovery of oil.
Like H. L. Hunt he believed the American public needed instruction in political basics, and in 1951 be bought the Liberty Network of radio stations with outlets in thirty-eight states, to facilitate the flow of cracker-barrel interpretations of the Constitution.
Cullen was one of the earliest of the ultra-conservatives. He was against the New Deal from the beginning. Like Herbert Spencer, he was opposed to all government regulation, was opposed to the Marshall Plan, to the United Nations, to unionization and to the lowering of tariffs. In this latter respect an inner contradiction shows in his theory of self-effacing government, for tariffs are a government regulatory device in favor of domestic producers. Cullen's true position, like that of almost all the anti-regulation business people, is that he opposed government regulation that in any way might conceivably sandpaper business profits but he joyfully favored any sort of government
regulation, interference, intrusion, intervention, support or action if it was price-raising or promised to be directly profitable to business. This is the actual principle governing the pecuniary man, who is at bottom an unconscious anarchist, hostile to all government not his personal instrument.
Back in the 1930's Cullen organized what was known as the Texas Regulars, still the hard core of the ultra-conservative movement. In 1948 he supported the Dixiecrats, but in 1952 he led the revolt in the Texas Republican delegation against Taft in order to get on the ground floor with Eisenhower. He gave money lavishly in politics to any counter-clockwise movement.
Cullen, like H. L. Hunt, took his acquisition of wealth as a sign from on high that he possessed unique virtue, that he was of the elect, a prophet to lead the boobs to the Promised Land. His sudden riches not only gave him an excess of confidence but a feeling of omniscience and clairvoyance in all human affairs. Although he had never studied these matters, was indeed like Hunt anti-intellectual, he thought he knew all about foreign affairs, world politics, history and, above all else, the needs of the domestic political economy. These were quite simple: What was needed was a general application of the Horatio Alger philosophy within a simple Spencerian setting, each individual striving upward toward the kindly light of money with no intervention from government either to block or assist (except established businessmen).
In seeing the businessman as omniscient, Cullen was simply echoing an early American point of view. It was often said by the bullying Major Henry Lee Higginson, founder of the Boston banking firm of Lee Higginson and Company, that "Any well- trained businessman is wiser than the Congress and the Executive. " 38 And, if one gives full value to the operative word "well-trained," the major may have had an arguable point of view even though some fastidious minds might consider it faint praise to concede anyone more wisdom than Congress. But businessmen rarely limit omniscience to the well-trained and tend to feel that anyone who has made some money has given ample proof of his general wisdom.
Although a simple but forceful mentality such as Cullen's may evoke uneasy smiles among the more knowledgeable, it must not be forgotten that such men, by reason of their ability to put up money, have much to say in politics. Arrogating to themselves the role of supreme legislators, they use formal legislators, chosen in the catch-as-catch-can political process, as their cat's paws, mainly to block socially necessary measures. Cullen and his cracker-barrel colleagues placed their distinctive stamp on the internal colonialist politics of Texas, and they had more than a little to do with returning the Republican Party to power in 1952-60. They are always working at it, with money and main, and will never be satisfied until they install the straight Coolidge-McKinley ticket. They keep the lambent glow of the horse-and-buggy age bright in the thermonuclear-missile-automation-computer age.
James A. Chapman
Still another oil baron whose fortune reached awesome dimensions was James A. Chapman of Tulsa, Oklahoma. Chapman died in 1966, aged eighty-five, leaving about $100 million, most of it to the University of Tulsa, the balance to other educational and medical institutions.
Self-floated with $700 in 1907 on a tide of oil, Chapman was rated by insiders as Oklahoma's most successful oil operator. During his lifetime Chapman, said his attorneys, had secretly "given away" more than $75 million. His will made no provision for his wife and conveyed only $1,000 to his forty-seven-year-old son because, as it noted, "adequate provisions" had already been made for them (New York Times, October 15, 1966; 1:1).
De Golyer: A Man for Most Seasons
But not all of the oil men are cracker-barrel fugitives from textbooks, it is gratifying to report. Some are impressive figures and would unquestionably have risen to prominence in any socio-political system. One such was Everette Lee De Golyer (1886-1956), of remote French descent, who compares with most oil hunters as does a Stradivarius with a banjo.
De Golyer, a geologist and a geophysicist, was many times a millionaire, and is indeed credited with bringing applied geophysics to the United States. He is known in scientific circles, where he was very much at home, as "The Father of American Geophysics. " To De Golyer more than to any other one man goes the credit for the discovery of so much underground oil since 1910. Without De Golyer--or some counterpart--the world oil supply would unquestionably be much lower than it is today. For the oil industry from the beginning was very wasteful, haphazard and slapdash, full of apprentice barbers performing as surgeons.
De Golyer's father was a mineral prospector and De Golyer, born in a Kansas sod hut, initially took an interest along these lines. 'He joined the Wyoming Geological Survey in 1906 and later worked with it in Colorado and Montana. But soon tiring of rule-of- thumb methods, he enrolled in the University of Oklahoma where he was graduated in 1911 at the age of twenty-five. In the summers he worked as a field geologist and in 1909 joined the Mexican Eagle Oil Company, then owned by British interests and later, sold to Royal Dutch Shell.
On his first trip out in the area near Tampico, later known as "The Golden Lane," relocating the search in accordance with his knowledge of structural trends, he brought in Potrero del Llano No. 4 well, one of the most spectacular gushers of all time. This well produced 110,000 barrels daily and cumulatively produced more than 100 million barrels. De Golyer was promoted to chief geologist and then chief of the land department.
Some sources say he was a millionaire before finishing college; others relate that Mexican Eagle put him on a salary of $500 a month--fairly good money in 1909--while he went to school. He continued with the company in a consultative capacity until 1919, although he left it officially in 1914 to open his own offices as a consulting engineer to the petroleum industry.
Called to England in 1918 to participate in the sale of Mexican Eagle to Royal Dutch Shell, he was then backed by Lord Cowdray of Mexican Eagle to form the Amerada Petroleum Corporation, of which he was made vice president and general manager, then president and finally chairman. He retired from highly successful Amerada in 1932. He continued, however, with the Geophysical Research Corporation, which discovered oil fields by scientific methods for the big oil companies. He also formed Core Laboratories, Inc. , and the Atlatl Royalty Corporation to carry on oil discovery and ownership.
De Golyer's method was to apply the knowledge of a trained, scientific mind nourished widely in the theoretical literature about the causal processes of earth formations. He picked up some of his most valuable insights by applying early European theory to his work. The presence of underground salt domes is now known to predict the presence of oil. How are salt domes formed? Then prevalent theory held them to be of volcanic origin, the result of the expansion of growing salt crystals or deposits from rising columns of brine from deep sources. De Golyer came to accept the European theory that they are formed by plastic flow, the salt having flowed owing to the weight of overhanging rocks. Once the salt dome has been found, the oil prospector must determine the formation of the underlying rocks in order to get through. All this
careful inquiry was quite out of harmony with the practical, common-sense, feet-on-the- ground, down-to-earth, no-nonsense, rule-of-thumb guesswork in the field by the boys who had just recently left the cracker barrel.
De Golyer implemented his insights by introducing the use of the seismograph, gravimeter, torsion balance, electro-magnetic surveys and explosives to send shock waves through the varieties of underground formations, thereby determining their texture. Using these appliances he found field after rich field in Texas, Oklahoma and the Gulf region. Cullen and others, sweating for money, copied his methods, which are now standard all over the world in oil prospecting.
Basically a scientist, a student and a scholar, De Golyer was widely read, not only in his technical specialty but in the literature of the Southwest. He published a long, impressive list of original scientific papers and wrote about the history and personalities of the Southwest. From a money-making point of view he wasted tens of millions of dollars of time reading and writing. He collected priceless rare books--on the Southwest, on geology and geophysics and on scientific method and the history of science--and left them, a treasure, to the University of Oklahoma, the University of Texas and other institutions. He established the De Golyer Foundation to add to these valuable collections of books.
In the late 1940's, hearing that the Saturday Review of Literature was in financial straits, he came forward to give it a lift and was made chairman of the board. De Golyer served on literally scores of national and local cultural and scientific bodies and boards, lectured to serious audiences at M. I. T. and Princeton and served in 1940 as Distinguished Professor of Geology at the University of Texas. He held well-deserved honorary degrees from many American and foreign universities and was frequently decorated.
Although a moderate Republican, he served willingly under Franklin D. Roosevelt as oil adviser to the New Deal, later in the war, and as chief of the technical mission at the Teheran Conference. The number of his trusteeships, directorships and organization memberships was far too extensive to list here.
He is memorialized by the National Academy of Science (of which he was a Fellow) in Volume XXXIII of its Biographical Memoirs together with Thomas Hunt Morgan, the biologist; Robert A. Millikan, the physicist; Lewis M. Terman, the psychologist; and Josiah Royce, the philosopher. He was clearly much more than an oil prospector, businessman or capitalist. The Memoirs give a bibliography of his writings from 1912 onward, encompassing fifteen pages of titles.
After an illness of six years De Golyer shot himself at the age of seventy. 39
What De Golyer was worth is less interesting than what he could have been worth had he devoted himself solely to accumulating wealth. There is no doubt be could have been worth billions had he been interested in nailing down for himself every likely claim. As it was, his retained wealth was estimated at $10 million to $100 million at his death, a wide range. 40
Looking on his fellow oilmen with considerable reserve, De Golyer "frequently remarked that the talent for making money can imply a lack of talent for leading a useful life. "41 De Golyer certainly did not suffer from this deficiency.
But like some of the other oil men, De Golyer did believe in luck. "I hate to tell you," he once said, "how many times I've made money by going against my own judgment . "42 On this same theme realistic R. E. Smith, one of the Fortune listees, said, "My West Texas oil field was solely luck. It has 38 million barrels in reserve and cost me $5 an acre. It was the same with Hugh Roy Cullen. The first money he made was on some
land he didn't want; the oil company kept the 'A' acreage. They gave him some 'D' property--the lowest grade--as consolation and he hit. The company never did hit anything on their 'A' property. The lesson you learn as you get older is that it's luck. " Again: "The fortune of Matilda Geddings Gray," explained a Louisianian, "came mostly from her father. He made it on a herd of cattle; found an oil well under every cow. "43
Without some element of luck, no matter how hardworking, ingenious, greedy or unscrupulous the protagonist, nobody ever made much money. The general luck of the nineteenth century entrepreneurs was to have a great deal of new technology thrust under their noses--steam engines, steel-making processes imported from abroad, internal combustion engines, new electrical apparatus and the like. Few of the entrepreneurs participated in the creation of any of this but they did know how to convert it under lucky circumstances into titles of extravagant ownership--in their own names.
Raskob of Du Pont
John J. Raskob (1879-1950), one of the upper executives of the General Motors Corporation, prepared with a knowledge of stenography, got his start by becoming secretary to wealthy Pierre S. du Pont. Raskob's big coup some years later was to suggest General Motors as a likely investment for surplus Du Pont money, and he thereafter alternated risingly lucrative employment with General Motors and E. I. du Pont de Nemours and Company. The leading figure in trying to make Al Smith president in 1928 and the Democratic Party a replica of the Republican, he was made Private Chamberlain to the Pope. He founded the tax-shy Raskob Foundation for Catholic Activities in 1945; it had assets of $29,281,060 in 1960 and four Raskob sons among its officers. On his death he left his wife and each of ten surviving children trust funds of unspecified amounts. 44 One presumes they were generously proportioned. As Raskob was a pecuniary man to his fingertips with no other apparent interest in his life, his fortune before he started redeploying it may well have exceeded $75 or $100 million.
William S. Knudsen
William S. Knudsen (1879-1948), former president of the General Motors Corporation and Director General of the Office of Production Management during the war, had one of the "ten biggest incomes in the country"45 but the expanse of his holdings at the end is fogged. Standard reference media, including the New York Times, give no accounting of his estate, which was presumably disposed of before his death; he established no foundation, left three daughters and one son, all presumably financially soigne? .
A Note on Probate
There is nothing conclusive about the probate of an estate, In his lifetime a wealthy man might make tax-free dispositions to foundations or other endowments (which usually show on the record) or he might make regular low-tax distributions to members of his family. At a gift-tax cost of $325,700 as of 1965, an unmarried person could transfer $1 million to an individual. If he did this every year for twenty-five years to five persons, thus transferring $125 million cumulatively, he would have to pay $40,712,500 additional in taxes, a tidy sum. If he waited to bequeath $165 million at death to individuals, the tax bite would be $125,438,200, or about $85 million more than by the installment-transfer procedure.
But by halving his individual gifts each year and putting the other half of the money into a tax-free foundation (which his heirs could play with as it suited their tastes) he would pull his total transfer taxes down to a low, low $6,119,375 or a little less than 4
per cent on $165 million. His saving over the first procedure, for the benefit of his heirs and their foundation, would be $34-plus million; over the second procedure, a little under $119 million.
Delightful though this prospect is, if the man is married he can make the original transfer of $125 million solely to individuals at only double the cost of 4 per cent, paying a little more than $12 million, under special provisions for estate division written into the law in 1948. His saving here over the first direct transfer is $28-plus million, which he can slam into a foundation for so much extra gravy. Whoever said we didn't have a thoughtful Congress to write such thoughtful laws? In the meantime, newspapers and "spokesmen"--that is, paid propagandists--go about talking loosely about high taxes on the big estates. When one gets down to the fine print, those high taxes just aren't there.
A man might, indeed, die stony broke and still have ruled over a large fortune if he had concentrated a goodly sum in a foundation. As head of the foundation he would naturally set himself a substantial salary. He would not, legally, own anything; he'd just control the assets of the foundation by charter and the disposition of its income. Until he drew his last breath, even though he was only on straight salary, he'd have corporate, political and other power through his foundation as well as the satisfaction of knowing that he hadn't helped the rustics in Congress with their eternal problem of budget balancing. So the mere fact that a man dies without leaving traces of large assets really proves nothing.
Jesse H. Jones
Jesse H. Jones (1874-1956) was for many years a power in the land and a top-level, hard-bitten wheeler-dealer. A banker and politician based in Houston where he owned the Chronicle, banks, buildings and other properties as well as properties in Dallas and Fort Worth. Jones became chairman of the Reconstruction Finance Corporation and Secretary of Commerce under Roosevelt II. As chairman of the RFC he is said to have made the decisions to lend more money than any other man in history, getting himself involved, too, with some of the borrowers. His father was a Tennessee tobacco planter, and young Jones came to Dallas at age twenty to find a place under an uncle in the lumber business. His estate at death was only $8,765,302,46 but he had earlier made large distributions to children and a foundation, The Houston Endowment (1937), which in 1962 had assets of $43,939,169 and had just made grants of $7,249,765.
Amon G. Carter: Texas Ueber Alles
Amon G. Carter (1879-1955), son of a blacksmith, went to work at age twelve selling newspapers a? la Horatio Alger, graduated into selling photographs and then, in 1904, into the not-so-great game of advertising. In 1906 he became advertising manager for the Fort Worth Star and by 1923 was president and publisher of the merged Star- Telegram. He also weaseled into radio and television but made his biggest money in oil wildcatting. Under his ownership was drilled the discovery well of the big pool in the Wasson lease in Gaines and Yoakum counties, Texas. He sold out there for $16. 5 million and put the money into the Amon G. Carter Foundation, which at the end of 1962 had total assets of $32,519,275 (Foundation Directory, 1964). An aviation enthusiast, he was a founder of American Airlines and a major political influence in bringing various military aviation installations, bomber plants and missile enterprises to Texas. He is credited with using his influence to make Texas second only to California as an aviation center. He was a noisy Fort Worth and Texas booster and was said hyperbolically to own all of Fort Worth. He left two daughters, a son, the Star- Telegram, various pregnant properties and the foundation. No probate of his will was published in standard reference media available to this inquirer but if one assumes only
half his wealth was left in the foundation he was worth more than $65 million at some time in his later life, probably a bit more. 47
William H. Danforth: Apostle of Purina
William H. Danforth (1870-1955) of all American millionaires probably most deserves the much-abused characterization of philanthropist. For Danforth genuinely liked people in general and was obviously stimulated by them.
Born in the backlands of Missouri, Danforth went to St. Louis at fourteen to go to school and remained to be graduated from Washington University. With $4,000 borrowed from his father he went into a horse-feed partnership with two men in 1894: the Robinson-Danforth Commission Company. A natural salesman, Danforth traveled through the Middle West selling Purina Horse Feed in a folksy way ("Purina Feed will make your horse laugh," one of thousands of bucolic Danforth slogans) and buying ingredients from farmers. The day after one of the partners sold out to Danforth in 1896, the business already booming, a tornado blew down their sizeable plant. With an unsecured bank loan of $25,000 he rebuilt, and the business extended into all varieties of farm feeds Under the Purina label. It also went into the production of whole-wheat cereals for human consumption (the new health fad) under the familiar checkerboard label. This latter was adopted from a farmer's shirt design and for some reason had such an hypnotic effect on customers that it was widely infringed but successfully defended in the courts.
Danforth was quite spontaneously an enthusiastic extroverted Christian, a YMCA man (he served in France as a YMCA secretary in World War I), a believer in the social gospel and a true, corn-ball do-gooder. He seemed to feel that good will, good humor, enthusiasm and energy were all that were needed to put the world to rights. A Congregationalist Sunday School teacher and superintendent, he believed in helping young people help themselves. He gave thousands to finance camping trips and outings in the woods and on the shores for the young. He was a pioneer in helping finance mostly somewhat bucolic college educations, for which in 1927 he established the Danforth Foundation (assets in 1962: $125,694,089, mainly in Ralston Purina stock). Danforth believed in college as much as he believed in the Bible.
Danforth ran his business pretty much like a folksy husking bee with plenty of homespun high jinks. He required his employees to exercise together and sing together, and was the originator of widely copied employee welfare programs such as contests, office messages and personal items, employee theatricals, awards, parties, picnics, square dances and general one-big-happy-family stuff. He produced mottoes tirelessly and wrote inspirational books and pamphlets in the school of Dr. Frank Crane, Elbert Hubbard and Orison Swett Marden.
Everybody around Danforth was caught up in a blizzard of activity, all happy Christian soldiers marching onward and upward and holding forth the holy grail of Purina. Somehow, money filtered artlessly through the whole like molasses in a bran mash. Danforth unquestionably believed in everything he did. There was probably not an insincere bone in his body. And the good Lord just made that cash register ring, ring, ring.
Danforth was extremely wealthy by 1929, when Jehovah suddenly signaled that he was unaccountably displeased. All of Danforth's holdings were wiped out in the stock market crash with the exception of his ownership of Ralston Purina.
The sign probably meant that the good Lord wanted him to stay out of the wicked stock market and stick to healthy, whole-wheat food.
After the crash, business for Purina slacked off so badly that Danforth, depressed, had to lay off old employees. As grain prices continued to tumble Danforth found that he was constantly having to sell for less than he paid for the raw materials and labor. He was, in short, going broke in a big way. Satan was in command.
But the Lord had not forsaken His earnest worker. In 1932 Danforth relinquished control of the business to his son Donald, recently out of sleek Princeton University and in his father's estimation not much of a businessman. But the boy's mother spoke up staunchly on his behalf, Donald took hold and, giving the business the old college try, he made good in such a way as to amaze the elder. In the general inflation, sales were whirled tip from $19 million in 1932 under Donald's shrewd Ivy League ministrations to $400 million in 1956, when Ralston Purina chugged into eighty-seventh place on Fortune's list of the mightiest corporations. In the distance such giants as AT&T, General Motors and Standard Oil of New Jersey could dimly hear the corn-belt juggernaut slowly creeping up on them.
Danforth himself was a "natural" in a world of counterfeits. Personally likeable and uncomplicated in his views, he was simple-minded and nai? ve and perhaps just lucky never to fall into the sights of the financial sharpshooters all around him. He took no visible interest in politics. His early heroes were Hill, Harriman, Rockefeller, Astor, McCormick, Carnegie and their like, whom he saw as builders of the nation, Daniel Boones of the dollar. He longed to emulate them. He always sought out the business great in an effort to learn their "secrets. " He looked up John Wanamaker, whom he admired both as a businessman and as a Christian layman. (In Danforth's view "businessman" was just about synonymous with "Christian. " Jesus was after all, as it has been said, a salesman. Danforth would gladly have given him a job selling Purina. ) Once Danforth followed Henry M. Flagler, the Standard Oil tycoon and Florida promoter, around a golf course in Florida, pencil and notebook in hand, and asked the great man many questions, to which he was graciously given answers. Danforth also sought out Henry Ford for prayerful discussions about philanthropy.
As far as the record shows, Danforth (unlike many of his prominent business contemporaries) never engaged in any shady practices, was never involved in any swindles, was never the defendant on criminal charges and was never accused of exploiting his workers. Nor was he, it seems, ever seriously criticized, knocked, called to account or rebuffed in good times or bad. For a portrait of the American capitalist as an extremely good, wholesome, honestly Christian earnest outgoing do-gooder one must turn to William H. Danforth,
The name of Ralston got into the Ralston Purina label in a curious way. Early in this century there was a Dr. Ralston who established health-food clubs around the country. Danforth, in order to get into the human food market with his whole-wheat cereals made a money-for-name tie-in with the good doctor and Ralston Purina was off on the heels of Quaker Oats and Kellogg's Corn Flakes. Health foods, big money and religion all gathered at the shore of the mighty Mississippi river. 48
New-Old Fortunes
Although all these noninherited fortunes have been treated as new, they are new only in a relative sense. Almost all the big individual noninherited fortunes mentioned in this inquiry date back before World War II and, indeed, the bulk of them date before 1929. Most of the Texas oil fortunes were founded between 1910 and 1925. The General Motors fortunes were all in foetal existence in the 1920's. Although the names of the owners are less familiar than Rockefeller, Morgan and Vanderbilt, every single one was already rich on the eve of Pearl Harbor and nearly all were rich in 1929.
Many clearly date from before World War I--Danforth, Moody, Jones, Getty.
Unless processes are going on inaccessible to inquiry it can be said that big new individual property accumulations are now taking place, if at all, at a decidedly diminished pace. And this is understandable in view of the entrenched position established by hereditary wealth. No man, however puissant, can come along and simply say "move over" to the Standard Oil Company of New Jersey, E. 1. du Pont de Nemours and Company or dozens of similar enterprises, Nor can such a puissant man by any method yet disclosed take them over as his own.
Whirling Dervishes of the Mass Media
Although the barrel has been scraped in the search for new or nonhereditary wealth on the American scene, and just about every likely candidate appears to have been noticed, there can be no guarantee that some big "sleeper" has not been overlooked. We have ignored, for reasons of space, stuff ranging from $25 to $75 million.
Most of the names of new fortune-builders put before the public are those of men who are little more than speculative entrepreneurs backed by banks or some syndicate. As long as these whirling dervishes stand upright they receive rapt attention. But most of them vanish in a cloud of debt and tears to become skeletons in the Death Valley of newspaper files.
Newspapers are interested in such worthies for at least two reasons:
1. They want new names and faces to present to the public, and many people as well as editors seem to find it thrilling to read of some immigrant who arrived in this country with five dollars and went to work as a rag picker , quietly saved his pennies, gradually bought real estate and finally emerged as the greatest real-estate tycoon of all time. Or so they say until the banks start calling loans.
2. They cite these putative geniuses of pecuniary derring-do in order to prove that anyone who is willing to work hard, live right and tend to business can make at least a million and probably more in the United States--the American dream. A curious feature of this thesis is that the money-cult editors and writers who expound it are themselves not notably pecunious, are apparently unable to apply their own profound insight.
In the 1920's, in the aftermath of World War I, names to conjure with in the press were William C. Durant, founder of General Motors and possessor of a fresh fortune several times in his life; Jesse L. Livermore; Arthur W. Cutten; Frank E. Bliss, "The Silver Fox of Wall Street"; Benjamin Block; Michael J. Meehan; Joseph E. Higgins; Louis W. Zimmerman; George Breen; and Harry Content. 49 All went down the financial drain without a gurgle.
Arthur W. Cutten, as big as they used to be verbally blown up, died in 1936 while under indictment for income-tax evasion. His estate of $350,000, once reputed to be worth $100 million (press reports of the holdings of market operators are usually vastly exaggerated, thus attracting more suckers), had tax liens against it of $644,000 and was confiscated. 50 Rumors that he had funds in Canada, where he was born, were checked without affirmative result.
Cutten, for years a drab bookkeeper in a Chicago brokerage house, in the early 1920's became a speculator-manipulator in the grain pits. He finally had perhaps a few million drably to his credit and drably came to New York in 1925 at the age of fifty-four in search of drab new puddles to conquer, He engaged in buying and bulling stocks, assisted by hordes of even drabber men and women who bought anything they heard Bookkeeper Cutten was buying. Distributing to the suckers as the top he had set was approached, Cutten pocketed the profits. This process was endlessly repeated and would no doubt still be going on if the "Moment of Truth" had not come in October, 1929. Cutten was, with poetic justice, one of the many picadors and bandilleros whom the
dying bull managed to gore fatally before expiring. His career may be summarized as a transit from bookkeeper to gambler to nothing. There is no hard evidence that I can find that Cutten was ever worth $100 million, $50 million or even $10 million net; he was carried by the banks.
There were, too, in those salad days, high-flying dervishes like Samuel Insull, Charles E. Mitchell, Ivar Kreuger, Albert Wiggin, Howard Hopson, Edward Doherty--all men with complex Rube Goldberg schemes afoot and in the end all speculative flat tires, personally as undistinguished as any pushcart peddler. But in their day the newspapers ecstasized over them as proof positive that under the great American system of godly democracy any right-thinking, right-living man who had faith in the United States should, could and would acquire a fortune.
The biggest flops of all, as one would expect, were those men widely regarded as the soundest. The superlatively sound men of the time were Oris P. and Mantis J. Van Sweringen of Cleveland, presented in the press as masters of railroading (although they were actually two obscure provincial real estate brokers). With the backing of the J. P. Morgan bloc the Van Sweringens busily floated vast railroad holding companies, busily issued watery securities, busily merged, unmerged and submerged railroads and busily carried on general financial wildcatting in search of profit. Their bubble burst in the depression, removing two geniuses of bank-press creation from the scene.
Just how big the Van Sweringens were considered in the 1920's may be seen in the fact that they were listed in 1930 by James W. Gerard, former ambassador to Germany, as one of the sixty-four shoguns who "ruled the United States. " President Herbert C. Hoover was, correctly, not on this list, which was headed by John D. Rockefeller I, Andrew W. Mellon, J. P. Morgan II, George F. Baker, John D. Ryan (copper), Henry Ford I, seven Du Ponts of high dynastic numbering, the five Fisher brothers of Detroit ("Body by Fisher"), A. P. Giannini, Daniel Guggenheim, a few corporation executives and some dubious elements no doubt included by the diplomatic Gerard to be complimentary: William Green, Matthew Woll, Roy W. Howard, William Randolph Hearst and, of all people, Adolph Zukor and Harry F. Warner, the film moguls.
But although one might quarrel with the catholicity of Gerard's choices, he did adhere to the theory, bitterly denied by all party-liners of the American myth, that some sort of dimly visible shogunate lies behind major trends in American policy. The country was not being run from Washington by duly elected representatives of the people, Gerard sensed, but by a group of remote-control drivers, masters of the cash register. Its ringing was, to them, the Liberty Bell, signaling their own freedom from want.
One could go on for many pages reviewing the lists of the financial also-rans, a fevered crowd-all duly celebrated in their day. In order to bring things down to date, we may notice in parting the name of William J. Zeckendorf, the big builder, operator and general juggler of office buildings and hotel properties, since World War II given much press attention as an authentic coast-to-coast tycoon. The Zeckendorf story, a reader's thriller for many years, may be now told very briefly: His enterprise went decisively bankrupt in 1965 as the banks called the loans, a process irreverently known as "pulling the plug. "51
Fallacious Logic in Media Celebrations
The notion that new fortunes are being made right and left in the United States, selectively documented from time to time by Fortune and the Wall Street Journal, may now be looked at briefly. In general, these publications perpetrate several fallacies in logic in supporting this thesis, notably those of untypical instances and of neglected aspect.
Fortune (January, 1952) presented a survey titled "The New Rich," cueing it in with the substatement that "A lot of enterprisers you probably never heard of are proving you can still strike it rich in America. "
"Since 1945," said Fortune, "a brand-new crop of rich men has risen in the U. S. Mostly shirt-sleeved enterprisers who started from scratch, they are hardly more than well off compared to the 'Pittsburgh millionaires' of the nineteenth century or the 'Detroit millionaires' of the Twenties. What makes them spectacular is their profusion. Every state in the Union has them by the hundreds, and their collective wealth, glittering from coast to coast, has given the whole country a pleasant golden hue. "
(I find it difficult to believe that any responsible writer of such a line is not being exaggeratedly ironic. )
"They are the core of that fast-growing group whose 15,000-odd members report incomes between $100,000 and $300,000 a year; their affluence is neither freakish nor unstable. Right behind them, ready to step into their shoes, are roughly 50,000 individuals who in 1948 reported incomes of $50,000 to $100,000 a year, and 175,000 who reported $25,000 to $50,000. " Fortune takes no account of the carefully established fact that most of these incomes are old-line asset-incomes, not the incomes of new men.
"Nationally their presence is recorded in the 400,000 Cadillacs sold since 1945, the 37,000 pleasure craft registered since 1946, the doubling of Chris-Craft's 1951 big-boat sales (forty-two feet and up), and the introduction, under the pressure of demand, of a sixty-two-footer, priced at $125,000. A score of the splashier restaurants have become fabulously successful as a result of their patronage; their private planes, as many as two hundred at a time, fly in for the bigger Texas football games; and their dexterity with an expense account since pleasures and business are bard to sort out in wholly owned enterprises, gives them a spending power far above others making the same amounts in straight salary. "
Fortune soberly names some of the new paragons as follows:
William Mullis (frozen shrimp, Georgia); Jeno Paulucci (frozen chop suey, Minnesota); Sam Joachim (burlap bags, Texas); Boss Sams (church furniture, Texas); Abe Katz (plastic toys, New York); Ralph Stolkin (punchboards, oil, cattle, movies, TV, Chicago, valued by Fortune at $35 to $50 million with no source evidence cited); Vern Schield (power shovels, Iowa); Dr. Earl Carpenter and John C. Snyder (baby beds, Wisconsin); Winston Smillie (floor cleaners, Missouri); Malcolm Lee McLeod (timber, South Carolina); Milton Brucker (plastics, California); Harry E. Umphrey (French fried potatoes, Maine); Hugh B. Williams (earth-boring machines, Texas); "Smiling Jim" Moran, "The Courtesy Man" (auto dealer, Illinois); Sam Eig (real estate, Maryland); Kenneth Aldred Spencer (chemicals, Kansas); Herman Delmos (Breezy) Wynn (sporting goods, Georgia); Fred Hervey (supermarkets; restaurants; bog farms; mayor of El Paso, Texas).
All these are instances, says Fortune, of "individual success. " What they all are, in fact, are fairly run-of-the-mill marginal businessmen, hailed by Fortune as the new rich. No balance sheets are revealed, no listing of bank loans. How many will emerge with a substantial net worth is not shown, nor how many will go the way of Zeckendorf and thousands of others.
In many cases, especially where annual sales are cited, one can make certain hard deductions. The baby-bed makers, said Fortune, had run their sales up to a million dollars a year. Now, some of the most successful U. S. enterprises regularly have around 14 per cent profits on sales, an envied figure even if sometimes exceeded. If we gratuitously give this superb percentage to the baby-bed makers they were making
$140,000 a year. Split two ways this is $70,000, which after taxes leaves less. Allowing each entrepreneur to live very frugally, let us say he saves $50,000 a year. In ten years he will then be worth $500,000, in twenty years $1 million. The point is that few small businesses keep up this way. They run into competition and other vicissitudes, mostly from larger enterprises.
But Kenneth Aldred Spencer is doing well, says Fortune. "Besides a 850,000 salary, in 1950 he received $377,000 in dividends on his 236,000 shares of common stock and realized $118,000 through sale of the purchase rights of a new issue. 'Smiling Jim' Moran has set up a $1,450,000 trust fund for the children. " Not too bad but, really, chicken feed.
But these simple annals of the merely well-to-do, whom we always have with us, hardly prove that new fortunes are in the offing. Successful business entrepreneurs though all these men may be, one can scarcely regard them as "the new rich. " They are small fish in a pond full of large fish. And the odds against any of them becoming big fish--authentic barracudas--are enormous.
As instances of the ability to make new fortunes on the American scene, we must pronounce a Scotch verdict: not proven.
Where the reportorial fallacy enters in is the citation only of these minor winners, no losers. But of the many who answer the siren call to riches few are chosen, as the record of bankruptcies shows. Business failures in the United States, according to annual reports by Dun & Bradstreet, national credit raters, have in most years since 1950 exceeded 10,000 and in some years 15,000. Between 1950 and 1953 they ranged between 7,611 and 9,162 and have not to date fallen below 10,000. In 1963 they totaled 14,374 with total liabilities of $1. 3 billion, the value of a largish super-corporation. For every businessman in a given year who makes enough of a splash to come to the attention of Fortune's editors, about 10,000 split a got trying and cough blood in the bankruptcy court. If it weren't committed to dispensing sunshine, Fortune could write a melancholy article every year on business failures and issue a thick supplementary directory merely giving names and addresses.
Nor do these figures show the panorama in its full sweep. The special monograph on small business of the Temporary National Economic Committee, a joint Senate and Securities and Exchange Commission operation, in 1939 revealed that "in the first thirty-nine years of this century, 19 million enterprises opened their doors and 16 million closed them. " This was a four-decade failure rate of 85 per cent.
Henry Thoreau, writing in Walden in the mid-nineteenth century, concluded that the failure rate of businesses in his day was 97 per cent.
The Failure System
In business, under the American system, each year the failures exceed the new successes by a very, very, very wide margin. In business, under the American system, hundreds of thousands more have failed, generation after generation, than the few who have succeeded. If we are to judge by the preponderance of individual successes over failures or vice versa, then the American system, businesswise, is a record of steady, almost unrelieved failure. It has failure literally built into it. It is indeed a near-miracle, front page news, when anyone really makes it. This judicious observation sounds paradoxical only because it contradicts conventional propaganda.
As it is observed by Professor Paul A. Samuelson of M. I. T. in his standard textbook, Economics (McGraw-Hill, N. Y. , 7th edition, 1967, p. 76), the average life expectancy of an American business is six (6) years!
While it is true that no particular blame attaches to anyone for the high rate of small business mortality, blame can be leveled for the misleading propaganda about the business system. By the one-sided stressing by propaganda organs of the few successes, many are led to lose their hard-earned savings in establishing new businesses. Sound advice to 85 to 95 per cent of Americans contemplating opening their own businesses would, in the light of the facts, simply be: "Don't. "
The belief of a wide public that it can succeed in business supplies a lucrative crop of suckers for established equipment suppliers, usually big corporations. Banks, too, participate in this merry game by making loans against resalable equipment. The same fixtures are sold and resold to a long string of losers incited into action by florid accounts of success in the Wall Street Journal, Fortune and other media.
Today, the new man going into business, like the individual consumer, does not realize that all the possibilities in almost every situation have been determined down to decimal places by batteries of computers and the results have been evaluated by staffs of exceedingly acute experts. In pitting himself against these computers and highly paid experts, the ordinary man is very much like an amateur chess player who elects to pit his skill against a consulting collection of chess masters. His doom is virtually sealed with his very first move.
Fortune's valedictory for its inspiring group of minor successes was that "The new rich symbolize the abundant health of the U. S. economy, for they have been pushed up by a general prosperity below. A fair guess is that money in the hands of millions at the base will keep them at the summit and in the decade ahead swell their number by the thousands. "
More Fuel from theWall Street Journal
The editors of the Wall Street Journal in 1962 put somewhat similar findings about
thirteen men and one woman into the form of a book. 52
The foreword by Warren H. Phillips, managing editor, makes it clear that the presentation is designed to prove something: that it is as easy as it ever was to make a fortune in the American economy, that it is desirable to do so and that fortunes are being made right and left. Like the Fortune group of 1952 the Journal's group of 1962 embraced only modest fortunes, men who might be called the "poor man's millionaires. " They did not pretend to be like the all-time heavyweights of the Fortune 1957 list.
As Mr. Phillips observed, "It is often said that today it is infinitely more difficult to amass great wealth than during earlier periods in the nation's history; that the nation's economy has matured, and the rags-to-riches legend belongs to its period of youthful growth; that business opportunity today is highly limited, not only by high taxes, but by stiffer competition from large corporations and by pronounced restrictions based on education, race, religion, sex and age.
"The evidence sharply contradicts this impression. " 53
The only "evidence" Mr. Phillips cites is the number of postwar million-dollar incomes that we have already examined, incomes from established assets.
"All such statistics suggest that the opportunities for making fortunes in this country are as wide today as in any earlier period of history. " 54
The statistics on large incomes provide no evidence whatever for concluding that new fortunes are being made or that there are opportunities for making fortunes. Without the identities of such large income receivers one cannot tell whether the income is from an old or a new fortune, from asset-wealth or from earnings in the form of salaries or commissions.
