No More Learning

The Corporate Rule: Gentiles Only
The club rule against Jews, not at all strangely, turns out also to be the corporate rule. Some writers deplore, directly or by implication, the nonadmittance of Jews (and Negroes) to the clubs; but even if they were admitted matters would be little different. What significant alteration of the world for the better would follow if Sidney Weinberg, Meyer Kastenbaum or Thurgood Marshall were made members of The Links or the Knickerbocker Club? Could they, even if they wanted to, change the finpolitan outlook? For the clubs make sure, in advance, that anyone taken in agrees broadly with their weltaunschauung.
If Jews were suddenly admitted to the clubs and upper corporate positions would it be a gain for liberalism? In view of Baltzell it would (and he is probably right in this) result in a strengthening of the ruling class, in making it more competent, less mindlessly castelike. It would make the ruling class more effective, would make it, as far as sheer merit is concerned, more aristocratic. But merely the selection of the best people in a certain limited scale of values is no guarantee of general aristocracy. The best gangster, although he may be an aristocrat among gangsters, can hardly be taken as an aristocrat.
Baltzell defines aristocracy as follows: "By an aristocracy I mean (1) a community of upper-class families whose members are born to positions of high prestige and assured dignity because their ancestors have been leaders (elite members) for one generation or more; (2) that these families are carriers of a set of traditional values which command authority because they represent the aspirations of both the elite and the rest of the population; and (3) that this class continue to justify its authority (a) by contributing its share of contemporary leaders and (b) by continuing to assimilate, in each generation, the families of new members of the elite. As with the elite concept, I do not conceive of the aristocracy as the 'best' or the 'fittest' in the sense of the term 'natural aristocracy' as used by Jefferson. The aristocratic process means that the upper class is open. " 22
He is not, however, making a plea for aristocratic rule but, as he stresses, "it is the central thesis of this book that no nation can long endure without both the liberal democratic and the authoritative aristocratic processes. " 23 He sees the true aristocrat as a public leader.
But aristocrats, in Jefferson's sense of the naturally best, are not produced invariably or even generally from a community of hereditary upper-class families, as Baltzell's tracing of the class origins of Abraham Lincoln shows.
"If an upper class degenerates into a caste, moreover," as Baltzell so well puts it, "the traditional authority of an establishment is in grave danger of disintegrating, while society becomes a field for careerists seeking success and affluence. " And this is the present American position.
A true aristocracy developed in the clubs (or elsewhere) might indeed change the world for the better. But merely lowering the barriers to Jews and Negroes would not accomplish this, as the clubs also bar on other caste grounds. It is the general values of the clubs more than their exclusionary policy that are most open to question.
The very caste structure of the American propertied elite--as Baltzell agrees--shows it not to be an aristocracy, shows that it is afraid of competition from natural excellence. Plato, an aristocrat, would not have barred a man from his Academy because he was a Jew but he did bar him if he did not know geometry. Nor would he have barred from
discourse a man just because he disagreed with him; he even reported for history the crucial difficulties for his beloved theory of ideas raised by Parmenides.
The nonadmittance of Jews (and Negroes) to the upper ruling clubs is cited here not to reiterate the truism that the finpols are illiberal and narrow-minded or to imply that Jews and Negroes should in the name of democracy or aristocracy be admitted to their circle. My observations, unlike those of Baltzell and others, are made only descriptively, to establish a tracer, as is done when physicians inject radioactive isotopes in order to make some determination about an organism. The nonadmittance of Jews to the central clubs enables us to make a vital determination: that decisions made in the clubs hold with rigor out in the corporate world and in society. If Jews and Negroes should now suddenly be admitted, the determination here made would still stand, for all time. It would signal only that the finpols had changed their minds: The acceptance of Jews and Negroes in the clubs and corporations would still show they had determining power. Whatever they do in this matter, pro or con, it is still their decision before history.
Jews, we may remind ourselves, are and have been members of the United States Supreme Court, the Cabinet and both houses of Congress. They have been high in the armed forces, often charged with the most vital matters of national defense, as in the case of Admiral Hyman Rickover. They have been governors of leading states such as New York and Connecticut, have been deep in the construction of delicate national policy in war and in peace. They are neither formally excluded by American public institutions nor informally excluded by the popular political process. The instrumentality of their entrance into political life has been, largely, the post-Civil War Democratic Party, and in this sense the latter-day urban Democratic Party has been more democratic (as well as more republican) than the Republican Party. Jews like Jacob Javits, Louis Lefkowitz and even Barry Goldwater in the Republican Party are distinct odd numbers.
But Jews, although very much to the fore in public life, and quite distinguished (Brandeis, Cardozo, Frankfurter, Lehman, Rickover, Baruch, Arthur J. Goldberg, Morgenthau, Ribicoff and others), disproportionately distinguished in the fields of learning and the arts and disproportionately few in prisons, are rarely acceptable as middle-range executives of the leading corporations and seldom appear as chief executive officers.
Now, it may be purely coincidental that we have before us these two parallel facts: exclusion of Jews from the leading clubs and from the corporate ranks. But this seems extremely doubtful. For the clubs have as their members virtually every leading stockholder, higher executive and key corporation lawyer. The policy vis-a`-vis Jews which they collectively enforce in the clubs in the name of personal selection of associates is the same policy they separately enforce in the quasi-public corporations.
Considering the wide acceptance of Jews in public life and in the elites of science, scholarship, professions, the arts, entertainment and organized sports and their simultaneous nonadmittance to the entirely private metropolitan clubs and quasi-public corporations, we are forced to conclude that elitist decisions have been made, pro in some quarters, contra in others.
It might be argued in the light of the evidence thus far that Jews are not admitted to the clubs because they are not admitted to the corporations, that the corporations control the club people rather than the club people the corporations. But as this is a uniform policy and the corporations have no unified meeting ground of their own, it seems evidentially preferable to conclude that the unified ruling must come from the locus of unified membership, the clubs.
In any event, we know on the basis of very careful direct research that the club is primary to the corporation. For if one is not admitted to one of the clubs first--in New York the leading clubs that have been mentioned or in one of the provincial cities to the central club, such as the Duquesne in Pittsburgh--one will never move into the upper corporate executive echelons. Admission to one of the prime clubs of, say, a vice president or general manager, is the general signal that one is regarded as a Coming Man, that one is either at or very near the top. Shades of deference the man was never before accorded now become his due. Not being admitted usually signals that a man has reached the end of his climb.
This general fact is precisely established by E. Digby Baltzell. 24 The evidence, says Professor Baltzell, shows that the club is the tail that wags the corporate dog.
Others, such as Osborn Elliott, traversing the same ground, cite evidence pointing to the same conclusion. 25
As a purely mechanical matter it would be difficult for a ruling by the corporations to be transmitted to the clubs; but it is easy for a consensus ruling to go from the clubs to the corporations. The leading stockholders and corporate officers all meet and mingle in the clubs; they do not meet and mingle in the corporations where they are limited to one or a few companies each. Unified policy comes, then, from the clubs, not from the corporations. The clubs are the centers of finpolitan eliteness.
For the purposes of this presentation it makes no difference where the discrimination begins--the clubs or the corporations. But by reason of the fact that it prevails in the leading clubs as well as the leading corporations, in the private sanctuaries of the controlling large stockholders, it seems clearly evident that the discrimination is the consequence of a decision in a closely knit group at the top. As we have seen, the corporations are controlled by very small groups, with ownership stakes ranging from 10 to 100 per cent. If these owner-controllers wished policy to be otherwise they could easily order it, in the corporations as well as the clubs. They do not want a different policy, however--at least not yet--so the present policy prevails.
As this is a policy neither required by law nor sanctioned by formal public policy, it clearly emanates from control quarters outside the framework of formal government or public discussion. It is policy based upon an autonomous elite decision. That decision was probably never taken after a full-dress discussion but originally emanated from, and has since been repeatedly endorsed in, innumerable informal club conversations.
Now, what are the grounds for saying that Jews are excluded from corporate managerial employment?
"In the United States," says a key University of Michigan study, "Jews are no longer disadvantaged with respect to education or income. Their training and educational background are conspicuously underutilized, however, in the executive ranks of most major corporations. The evidence need not be recapitulated here; every serious effort to collect data on this subject has yielded the same general conclusions. In recent years, for example, Jews have comprised 12 to 15 per cent of the graduating classes of the Harvard Graduate School of Business Administration, an institution to which the executive recruiters of many large companies regularly turn. Among the executives of such companies appearing at Harvard's seminars and training programs for businessmen, fewer than 0. 5 per cent were estimated to be Jewish. " 26
Exclusion is contrived, says this study, by the ostensible utilization of easily manipulated "nonability" factors in evaluating prospective personnel--social connections, religious background, attendance at the right schools, membership in the right clubs and fraternities, appearance, residence in good neighborhoods and
circumspectly self-assured deportment. Baltzell, however, cites instances where highly competent applicants for corporate entry who had all the "nonability" factors on their side in abundance, and seemed to be on the way in, were turned down as soon as it became clear they were Jewish. One sees this, in fact, very frequently.
"Approximately 8 per cent of the college-trained population of the United States is Jewish," says Vance Packard; "against this, consider the fact that Jews constitute less than one half of 1 per cent of the total executive personnel in leading American industrial companies. " 27 This figure should also be considered in relation to the fact that 3 per cent of the population is Jewish. Jews, very clearly, are glaringly underrepresented in corporate management in relation to their frequency in the population and among college graduates.
Out of 2,000 management people at U. S. Steel a researcher for the American Jewish Committee could find only nine or ten who were Jews, less than 0. 5 per cent. 28
The facts are established as well in a number of careful special studies, national and local. Even in cities with large Jewish populations, like New York and Philadelphia, where frequency in the population might be expected to be reflected at least locally in management ranks, the percentage of Jewish participation is negligible. 29
Exceptions have been few. Gerard Swope, one-time president of General Electric, was never accepted by the leading clubs, nor was David Sarnoff of the Radio Corporation of America, which was developed with Jewish money. Sears, Roebuck, although built by Jews, goes along with the practice of preferring non-Jewish executives.
Of perhaps more significance to most people is the fact that this exclusion extends to lower levels of employment in companies and industries. Many companies and industries discriminate boldly in lower-level employment of Jews as well as Negroes; some discriminate only against Negroes.
It was reported in 1965 to Secretary of Labor W. Willard Wirtz that major corporations, recipients of huge government defense contracts financed out of public tax money, were discriminating against Jews and Catholics as well on managerial and lower levels. Secretary Wirtz promised to seek laws to stop the practice. 30 When discrimination against Catholics can be shown, it becomes political dynamite owing to the frequency of Catholics in the national electorate. Jews, in addition to being fewer, are more concentrated in certain regions, and anti-Jewish discrimination is more easily and slyly applied. It is, moreover, approved by the mindless generally, Catholic or Protestant.
Because corporations have grown so that they extend over such a great portion of daily life, discrimination in corporations on managerial and lower levels serves to cut people off from positions where they can function. Among the many things corporations are tending more and more to monopolize are human functions. Most members of the labor force now work for a large organization--the $50-million-asset-plus corporations, government or the public-private educational system; it is increasingly difficult to find people who do not work for one of these. When corporations, thrusting into larger and larger areas of local and personal life, practice discrimination it simply cuts the victims off from a chance to function. Jews particularly, and Negroes, sometimes Catholics, are denied such functional opportunities, although some Jews have unwittingly benefited by being forced into independent though marginal enterprises of their own.
The most keenly felt loss, perhaps--and loss to the country--stems from the fact that many positions are classified as managerial when they are really technical and semiprofessional.
But the reason the barriers will not be as easily removed as some seem to suppose is this: The modern corporation is organized very much along military lines, although its military lineaments are carefully cloaked in all sorts of public-relations formulas. There is a chain of command, from the directors and top officers down to the department foremen. In this chain of command one obeys orders. The orders are not usually passed on brusquely, as in an army, and failure to obey the orders does not bring one before a courtmartial. The process is much subtler. The successful organization man can hear orders that are never uttered. In order to move up in the managerial ranks one must be "smart" enough to "catch on" without being told everything.
As William Whyte makes clear in The Organization Man, the members of the managerial chain of command are carefully selected with the minutest attention to detail. One can be shunted into numberless corporate Siberias, never to emerge, for all sorts of sins of omission and commission. If one's wife does not qualify for the country- club set this can impede promotion. Queer people in the family like pacifists or single- taxers can create doubts. Wearing the wrong clothes--too gay, too funereal, inharmonious--can earn disapproval and lack of promotion.
One is usually fired only for some overt infraction or glaring blunder. But not being promoted is often tantamount to being fired.
What is wanted, as Whyte makes clear, is the pleasantly agreeable conformist--an intellectual and moral castrate. Like the German soldier, it is not for him to reason why, but only to follow orders or to anticipate unvoiced orders. The aim of it all is maximum profitability amid public acceptance for the corporation.
The basic rule of the corporation is that which Theodore Roosevelt said was the ultimate criterion of his social class: "Does it pay? " 31
This chain of command in the corporations with their huge assets is obviously very important. It is no place for deviants, real or supposed. And the big owners of property are extremely nervous, very defensive, as some of their memoirs show. 32 One could deduce the same conclusion by considering their elaborate electronically guarded safe- deposit vaults, high electrified fences and stone walls around estates and complicated systems of guards, watchmen and locks in their dwellings. And it is true, as demonstrated by the existence of bank robbers and safe crackers and the utterances of radicals of the Left, that many persons have designs on their enormous wealth and position.
They are, therefore, unduly sensitive, perhaps hypersensitive, about their propertied domains. They don't want any wrong elements in their precious chain of command, and any element they don't fully understand is apt to seem unsuitable.
While Jews--and Catholics and Negroes--like other groupings of people, distribute according to the normal curve of probability, showing certain percentages of every type and most of them concentrated in the middle area, Jews like Negroes have a higher visibility. In the case of Jews the higher visibility, where it is present, comes from cultural differences.
Again, a number of prominent Jews appear to have taken seriously, too seriously, the formal documents of the American legal system, the Declaration of Independence, the Constitution and perhaps Lincoln's Gettysburg Address. Such were, obviously, Joseph Pulitzer and Louis D. Brandeis, who did not see the emerging corporation as an unalloyed boon. These were public men rather than finpols. How many other Jews, the finpols no doubt ask themselves, are like these?
Within the corporations, as the recent electrical-industry scandal shows, many things go on that are bound to be viewed askance by the public. When the milk is watered it is
necessary to have a line of loyal managers, to have nobody present who is apt to blow the whistle and call in the police. To insure this one needs carefully screened people. People who are excluded are, then, not basically excluded on racial or religious grounds--for the corporate men have no more interest in ideology than has a giraffe--but on grounds of reliability, real or supposed. Anyone about whom there is doubt that his primary loyalty will be to the corporation must be left out--and this goes for Jew, Catholic, deeply committed Protestant or any overt moralist, unorthodox ideologist or detached scholar.
In objecting to the exclusion of Jews it is overlooked that corporations exclude on other grounds as well. They wouldn't knowingly hire a David Thoreau for example. They aren't partial to liberals, and Jews are associated historically with liberalism. The exclusion of Jews, then, even by some corporate people who marry Jews, traces back today to the general fear of any disturbing influence along the chain of command. It is not that the corporations want passive people. They want aggressive, ambitious people, but aggressiveness and ambition must be channelized toward one goal: making money. Any other interest is disturbing.
While it is no doubt galling for any people, especially people within a supposedly democratic society, to be stigmatized in advance of performance, this whole prospect is not as bleak as it at first seems. Corporations (on behalf of their owners. ) get their way in society by both the proper and improper use of money. In one of the approved ways, they constantly entice personnel away from government, the educational system and other socially supportive areas. A man may be doing an excellent job as a personnel director for a school or hospital at, say, $8,000-$9,000 a year when he is spotted by an alert corporation scout, who offers him, say, $18,000 a year plus other prospects. As the saying goes, the man cannot afford to turn down this opportunity to better his condition, and few would ask him to; his family stages a celebration over father's "promotion. " He joins the corporation, where his work may not be nearly as socially effective as it was; it may, indeed, be socially destructive, depending upon what policies he is required to implement. He may have chosen people before on the basis purely of talent; now he must take into account "nonability factors. "
The corporations in this way constantly drain to themselves directing personnel of talent, whose talent they often misuse in the service of profitability and a sense of corporate security.
But an uncalculated social advantage to the barring of Jews by the corporations, although not relished by Jews themselves, is that they are left undisturbed in society as free-lance teachers, lawyers, physicians, editors, publishers, writers, surgeons, accountants and what-not. As the corporations don't want them, they come to form something of a reflex professional caste. Their services, thus, are available to noncorporation elements.
Lest some readers think I strain at a minor point, let it be noticed that many lawyers, physicians, surgeons, even publishers, refuse to handle certain types of cases or accounts for purely caste reasons. They feel the eye of Big Brother in the clubs, in the newspapers, is upon them. Many lawyers won't take certain cases because the elite of the community frown on the plaintiff or defendant (who presumably is not entitled to due process). Some doctors won't heed the wishes of those who call them if handling the case by purely medical canons violates the rule of some perhaps religious caste to which they belong (won't abort at the request of a patient but will remove a wart or lift a face, won't give godless injections, etc. ). Certain publishers won't publish books that reflect upon the nobly born and well connected or upon caste-approved ideas although they will publish books that show such in a deceptively favorable light. It is an
advantage, then, for the majority of noncaste people to have available to them the services of competent people uncontrolled and left at liberty by the corporations. One is more apt to get untrammeled skill.
We see in prospect, similarly, the lifting of Negroes from a caste of unskilled workers to one of prizefighters, athletes, entertainers and purely Negro politicians--the American Dream converted into a comedy of errors.
The unsought creative effects of barring Jews from corporations are perhaps most evident in publishing, although they may be found elsewhere as well. For the American cultural scene is incalculably richer for the presence of Jewish publishers, originally barred as higher functionaries for the older Anglo-Saxon publishing houses. Jewish publishers have been willing to publish all sorts of books that caste-minded Anglo- Saxon publishers were afraid to publish. Thus Simon and Schuster published Bertrand Russell, an Anglo-Saxon; and Alfred Knopf published the books of the very Saxon H. L. Mencken. Random House, Inc. , and Viking Press have been right up in line also publishing various non-Establishment Anglo-Saxon writers. There was, too, Joseph Pulitzer.
Now, if the Jews who founded these and other publishing houses had been initially taken into the older houses they would have been absorbed into the Anglo-Saxon nest, their best ideas blunted in the name of organizational gemutlichkeit. This is not to say there are no independent publishers other than Jews; but Jews were clearly the pace- setters who kept the publishing tracks wide open, as anyone can see by looking up the early experiences of American writers like Theodore Dreiser.
The most threatening feature about Jewish and Negro exclusion by elite establishments, though, is that it reinforces the ever-present biases of the mindless, who are always with us. "Gentlemanly anti-Semitism" in Germany, as Baltzell points out, paved the way for the later demonism of Nazism. "Gentlemanly anti-Semitism," in other words, is a charge of unfused dynamite lying about, waiting for the circumstance and the paranoid personality to supply the fuse.
Baltzell, citing memoirs and biographies, tells of a number of instances in which rejection of Jews in the financial world by the clubs induced much anguish of spirit. But just how sympathetic one ought to feel about someone--Jew, Gentile or Negro--being denied acceptance in the inner finpolitan world I wouldn't know, because I feel that being barred by The Links is about on a par, from a purely human point of view, with being barred by The Elks. The clubs, in other words, are not centers of excellence.
Baltzell relates that Bernard Baruch, an admirer of clubman J. P. Morgan, felt hurt at being excluded from the inner club circles of finpolity. Doesn't it seem as though his admiration was misplaced? Moneyed Jews, instead of feeling personally affronted at what would pass for insulting behavior in the world of ordinary men, surely ought to be able to see that finpolity precedes ordinary civility. What matter the opinions of curbstone moralists and liberals when billions are felt to be at stake?
What this pattern of discrimination imposed by the elite clubs on the corporate world, the country clubs and the college fraternities shows (leaving aside the alleged good or bad effects or the reasons for it all) is that (1) an elite decision has been effectively imposed on the country without leave of the government or any pluralist plebiscite and (2) that it is possible to impose effectively such elite decisions.
If it is possible to impose such decisions--in corporations, college fraternities and suburban residential areas--it is equally possible to impose them with respect to any individual or to any types-- ethnic, political, intellectual. The prejudices of the upper clubs, in other words, have the force of effective law throughout the land.
It is not unusual in history for the prejudices of a ruling class to prevail over a society as law, but it is the general supposition that the United States is sharply divorced from such a state of affairs. The supposition, however, is mistaken. Operatively the United States is not so new a model in the world as commonly thought.
The question now is: Are other such elite decisions made and imposed? Other Finpolitan Elite Decisions
A casuist might counter what has been shown with this response: It is true that an effective decision has been made by the financial elite against Jews, Negroes and sometimes Catholics but this does not prove that similar decisions of sweeping effect are imposed. All that has been shown is that it is possible to impose such decisions and that one has indeed been imposed.
It is necessary, then, to show that the same sort of decision-making takes place in various momentous areas whenever the finpolitans feel their vital interests are concerned.
It is not denied that other people make decisions, that there is a formal governmental structure for decision-making, as when President Truman decided in person to drop atomic bombs on Japan or President Johnson decided after consultation only with the joint Chiefs of Staff to involve the United States in futile large-scale warfare in Vietnam.
What is asserted is that often, in contravention or supplementation of formal government, effective, informal and momentous decisions are made by the financial elite without consulting anyone else. These decisions pragmatically have the force of law. They enable certain things to happen, prevent other things from happening. Furthermore, these decisions relate to fundamental dollars-and-cents areas in the life of the American people.
Our next area for consideration will be that of regulation of the corporations, long a vexing subject.
Many laws have been placed on the books for the ostensible purpose of regulating corporations, and they do regulate the corporations in those respects in which the corporations resign themselves to being regulated. Among these laws are the Sherman Anti-Trust Act as amended, the Clayton Act and various others that can be read about in a wide literature devoted to describing, analyzing and criticizing the anti-trust laws.
The proclaimed purpose of these laws is to preserve competition. Supplementing the work of the courts in applying these laws is the Federal Trade Commission and other quasi-judicial regulatory bodies.
Yet, despite token prosecutions under these laws and repeated investigations and disclosures by Congress and the regulatory agencies, competition dwindles steadily in American economic life. Fewer and fewer companies, as we have seen, control wider and wider areas of economic activity, more and more jobs. Except on the margins, small, independent owner-operated businesses are being slowly squeezed out of existence, nearly everybody is being forced to work for the corporations--or not to work at all.
As Professor Sutherland of Indiana University has pointed out, the token regulation of corporations follows the same lines as the probation system for juvenile delinquents, who are irresponsibles of tender years. The corporation like the delinquent is found to be doing something forbidden by law and is hailed before the court or commission. Light punishment and a suspended sentence are prescribed for both, and from each is exacted a promise not to repeat the forbidden act. In fact, each is enjoined against a repetition and is told that if it does repeat it will be called back and--now--seriously
treated; the delinquent will be sent to jail, the corporation could be fined for contempt of court. This last proviso is a criminal sanction, held in reserve.
But the corporation, unlike the juvenile, may offend against some other law, and may indeed be a constant offender over the legal spectrum, as many have been. If the juvenile delinquent did this he would be locked up for a long stretch.
Despite the continuous outcry about antitrust law enforcement it was demonstrated to the country recently in The Great Electrical Industry Case that the big enterprises are no more impressed by the government than are gangsters by a "fixed" police force. It will also be recalled that those officers who were convicted and fined and either made to serve thirty days in jail, or given suspended sentences, felt greatly put upon because they had done nothing that was not being done throughout every industry.
Not all monopolistic trusts break the law so precisely as the electrical industry brazenly did, carefully touching all the illegal bases, and those that do are careful to avoid having the proof as available as it was in the electrical industry case. The same situation prevails, there is strong reason to believe, in many industries but the judicial proof is not at hand or is not sought.
The laws usually, except in the case of vague charges like obscenity and blasphemy, state precisely what series of acts constitute the offense and under what conditions. Evidence must show that these acts and conditions were plainly present. In the case of something so complicated as a conspiracy to restrain trade, it is often difficult to muster the requisite evidence.
Not many open-and-shut convictions, therefore, have taken place under the antitrust laws. And they have not been much of a deterrent, as the electrical-industry case showed.
But, as we have seen, monopoly proceeds to establish itself also in many ways not stylistically forbidden by law, as in the case of heterogeneous or conglomerate mergers. Here we see companies in one central industry gobbling up companies in all sorts of directly unrelated industries, finally producing a giant finpolity of massive proportions with much concentrated economic and political power. There is up to this writing no law whatever against such combinations, which have the effect of giving a small group of owners and controllers monopolistic control over huge sectors of the economic system itself.
The antitrust laws did not apply at all to the public utility holding companies which had acquired operating companies all over the country and were "milking" them for excessive service charges, which were passed on to the public in the form of higher rates. The participants favor mergers because they broaden opportunities for screened internal, intra-divisional lucrative transactions, all ultimately affecting the prices paid by the public. Prices in the wake of the merger movement, as anyone can see, do not go down; they go up, and up, and up.
Instead of proving monopoly now, so much of it having been shown in hundreds of court cases, Federal Trade Commission hearings, congressional investigations and a voluminous scholarly literature devoted to the subject, the burden of proof has shifted to the other side. What must now be done as far as a public defense of the big corporations is concerned is to show a single clear instance of free competition on the upper corporate circuit. One doubts that this can be shown.
Now, it will be noticed that virtually all the leading stockholders, all the leading executives and all the leading lawyers of (1) big corporations that have been convicted in open court of monopoly or restraint of trade or related practices, (2) big corporations that have consented under threat of judicial proceedings to desist from certain practices,
(3) big corporations that have been shown in congressional and Federal Trade Commission investigations to be monopolistic or quasi-monopolistic and (4) big corporations that have been found guilty in open court of breaking other laws and ordered either to desist or fined--all these leading stockholders, executives and lawyers are members of the restricted clubs of the finpolitan elite.
If it could be shown as positively that they were all members of the Communist Party everybody would agree that the corporate practices were unquestionably part of a subversive Communist plot, directed from Moscow. The cry of "subversive conspiracy" would be raised from coast to coast.
There is, of course, no "plot. " There are certain shared attitudes and ways of doing business in a small continually consulting group, and these are reflected in the public behavior of the corporations. In a group committed to pecuniary aggrandizement as a major aim in life there will, naturally, be calculated breaking of rules made by plebeian outsiders who are, by definition, cranks, screwballs and crackpots.
The dominant feeling in the clubs, one may surmise from publications owned and religiously patronized by club members, is basic opposition to any and all effective antitrust laws. For regulation of the corporations by government agencies amounts to "interference" in private business affairs, one of the worst sins government can commit in the finpolitan view. Less bad, to be sure, is purely token regulation, which is mere insistence upon a principle, but even it is bad enough. "Hands off the corporations" is the covert club slogan vis-a`-vis the government. No club member would seriously disagree with it.
Still Other Finpolitan Decisions
In the clubs, too, are matured various campaigns to influence public opinion with a view to making it possible for basically accommodating government to modify policies. As such campaigns number into the hundreds, there will be mentioned here only the postwar campaign to remove price controls, which were very irksome to the corporations. The case was loudly made throughout the press that the economy would do much better with the controls removed. They were removed and the economy moved on, as predicted by experts, into endlessly troublesome inflation. Leading club people, such as Henry Ford II, spoke out in this campaign. But as profits outpaced the inflation, and eventually outpaced lower taxes, the decision to remove price controls was correct from the finpolitan point of view. The populace as a whole, however, grew poorer and proceeded to run over its neck into personal debt.
Here we may ask: Did the populace want higher prices? Does it ever?
Another type of case is this: It is shown by the government that some huge consolidation is clearly illegal and the Department of Justice calls for its termination under the threat of submitting the issue to the courts, whose ruling is a foregone conclusion. The offending party thereupon sets its agents to work on Congress with a view to getting the law changed so as to permit the particular consolidation, and succeeds in its efforts. This, of course, takes power, especially as many congressmen initially opposed to passing the enabling legislation must be won over. But, apparently so strong is the case for the consolidation, or the radiant power of money, that even the most antitrust congressmen finally agree.
Such a case was in 1965 and 1966 provided by the giant Manufacturers Trust Company of New York (Kirby), which had merged with the competing Hanover Bank and Trust Company and had absorbed the many directly competing Hanover branches into its system. The more the Department of Justice studied this merger, undertaken
without anyone's by-your-leave, the more it was convinced that it violated the applicable law all around. The Department served notice it was going to the courts.
Efforts thereupon began with Congress, which in 1966 passed the enabling legislation that permitted this and some other challenged bank mergers to stand.
Here is a clear case of a corporate decision that was made in violation of the law, with the law later changed in order to permit the initial elite-level decision to stand.
Again, many persons, some in Congress, made pointed note of how rapidly Congress (after the Supreme Court ordered Du Pont to divest itself of improperly held General Motors shares) acted to exempt the recipients of the General Motors distribution from a capital gains tax. The oldest and largest holders, owners of the greatest capital gains, were the Du Ponts themselves. Many observers thought it would have been more seemly if Congress had at least dragged its feet (as it ordinarily does) before passing this special bill. But congressional leaders, it seemed, were anxious in this matter to give especially rapid service, thus showing profound deference. Had Congress not acted as it did the Internal Revenue Service would have reached out for all the taxes it could get in the situation, as it usually does whether gains have been made legally or illegally.
So here is a case of another after-the-fact law being passed to facilitate top elitists in holding on to gains made out of what the Supreme Court considered a legally dubious situation.
Controlling Police Actions in Personal Affairs
Private elite decision-making extends to more personal matters involving the violation of the law, literally to murder. For the elite decision-making process can interfere with and prevent investigations and prosecutions for murder.
Cleveland Amory notes that in the case of at least seven notorious "Society" murders since 1920 the investigations were quashed "for the sake of the families. " 33 The greatest amount of publicity had attended all these cases, and yet investigations fizzled out. The killings were all "unsolved. "
The pattern in every case was of wealthy, black-sheep philanderers or cut-ups-rebels- who were variously shot, stabbed or bludgeoned, sometimes in the proximity of other people, often in peculiar, veiled circumstances.
While the plea of dropping investigations "for the sake of the family" has a sentimental appeal, in all the cases the waywardness of the victims was known to family and social set and in some instances had been bruited about in the tabloids. News about the black sheep would hardly be novel or unduly shocking to family or friends.
But a broader reason for quashing the investigations is found, perhaps, in the idea that ventilating all the circumstances would tend to indict a broad class of moneyed people in the eyes of the populace, which retains certain illusions about the gentry. The painstaking presentation of evidence in court, then blazoned in the circulation-hungry tabloids, and the sketching in of sordid background high jinks, would tend to document many doubts about the aristocratic pretensions of the moneyed "social leaders. "
There is no suggestion here that initial steps to quash investigations were taken in any of the metropolitan clubs--although they could have been--or that the police were the initiators of negative action. The police, as professionals, are normally inclined to proceed with investigations. Nor, in any of the cases, is it necessary to suppose that any of the families in any of the cases initiated the negative action.
The mechanics of these affairs are, in general, as follows: After the crime, with the police beginning to set up their lines of investigation, prominent individuals in the same social set, with at least the consent of the family (which could rightfully insist upon full
investigation) get in touch with the leading politician or politicians upon whom the police are dependent for their jobs. The right politician, responsive to the halo of money, tells the chief of police: "Drop this investigation, for the sake of the grief- stricken family. The guy got what he deserved anyhow and the family knows it. "
Here the police instincts are satisfied on two counts: first, on sentimental grounds (and most police are basically conventionally sentimental) and, second, on retributional grounds. Lost in the shuffle is the fact that someone, no doubt of high social position, has committed murder and is about to get away with it, law or no law.
Now, in the case of most murders, the victim has a family; and in many cases the family is as sick of the victim as any Society Family of its black sheep. But this does not deter police from delving into every aspect of his career that might point to his murderer. Even if it is thought the victim got precisely what he deserved, the police probe in every direction, and family now be damned. For the family involved is not an Important Family.
Whatever one thinks of all this, one must agree that the police in such quashed cases act in response to an elite decision.
Congressional Endorsement of Elite Decisions
Elite decisions are most often, perhaps, implemented by legislative bodies, Congress or the state legislatures. It would take hundreds of pages to show all of these in detail. Here I shall take space only to mention two conclusive examples, leaving Congress for scrutiny until later.
In the early 1960's there were before Congress two proposals, one to terminate tax- free expense account privileges of corporation executives and another to enforce by law greater truth in advertising. After some minor trimming with respect to the first, much to the disgust of the New York Times editorial board, which favored an end to the tax privileges, the tax-free fringe benefits were allowed to stand virtually unchanged. In the second instance, with newspapers and magazines taking a hand behind the inspiriting slogan of "freedom of the press," the call for more stringent policing of misleading advertising claims was defeated. Similarly, the cigarette industry succeeded in having watered down the anti-cancer warning proposed for cigarette packages.
Even though the outcome was determined in Congress it can hardly be doubted the decisions were made on high, for special interests, and were simply validated in congressional horse trading.
Who in the country, apart from the corporations, corporation executives and pleasure resorts, want these executives to have untaxed expense-account privileges, which amount to a hidden, untaxed raise in pay? The ordinary citizen cannot deduct the cost of carfare to or lunch on his job even though these are clearly expenses in his way of doing business.
Again, who in the country aside from advertisers and their publications and other outlets will stand up in favor of free and easy deception in advertising?
Both of these are clearly elite decisions carried out against what would be the true wishes of nearly all people if the issue were ever effectively submitted to them.
Let us recall another among many salient cases wherein Congress obliged. In 1948, as mentioned earlier, Congress changed the inheritance tax law so that half of a married person's estate would be untaxed--the marital deduction. As most people are married, they no doubt favor anything that favors the marital state, and "marital deduction" has a fine, solid, homebuilding ring. Who would be so abandoned as to oppose a marital deduction?
Again, as we live under the principle of equality before the law, it is well to notice that this law applies to everyone--provided only that he have a taxable estate, which means that it does not in fact apply to about 95 per cent of people.
In the present law the first $60,000 in any estate is tax free. Thus, if a married man dies and leaves a net estate of $100,000, only $40,000 of it was taxable before the revision of the law and only $20,000 after the revision. In each case only a small tax was paid.
But after the law was revised a married man who left an estate of $100 million was subject, first, to the deduction of $60,000 of taxable estate and then of $50 million! As of 1966, the estate would have paid a tax under the pre-1948 law of $75,342,000. But under the revised law such an estate would pay only $36,149,000! This represents a saving of $40 million, worth going to some trouble to obtain.
Cui bono (Who benefits? ) was a Roman principle used for determining the instigator of an action. Could anyone claim that the decision to revise this tax law, of appreciable benefit to very, very few people, was the consequence of some pluralist process? The country was not even aware that the law was being revised in this sleight-of-hand fashion, thus tending to preserve the very large estates and giving a minor tax benefit to small taxable estates.
The decision to revise this law was obviously taken among some wealthy discussants, possibly in one of the clubs, and the assignment to procure its revision was obviously given to some legislative representative of the elite.
Not only do the finpolitan elite make decisions such as the foregoing, mostly in their clubs, but they make all other decisions deemed relevant to, their vital interests--on taxes, wages, prices, price controls, interest rates, ethnic and religious employment policies, investment expansion or contraction, the evaluation of public personalities in the mass media, etc. , etc. Hence the propriety of referring to them as a ruling class.
But they don't, it will be said, make the decisions on war or peace. This is usually true, although they did make the decision to involve the country in World War I, a decision fraught with many troublesome consequences for themselves and the world. But at other times they are usually not heard on the question of war or peace, which they leave to constitutional officers, because they are ready to play their cards either way. Whether there is war or peace, they adjust their profit enterprises to the situation and make out very well in either case. No doubt, like most people, particularly in the age of catastrophic weapons, they prefer peace. But if constitutionally formal decision makers decide for war they interpose no visible objection. They are, however, always interested in "defense" contracts.
None of these decisions is made conspiratorially. All are arrived at after purely informal discussion, although now and then leading figures may retire to some private club room when delicate subject matter is to be broached. But the general atmosphere in the clubs is quite free and easy, open and aboveboard, with no hint of conspiracy afoot. These matters are just part of the ordinary course of finpolitan affairs, like shop talk in any professional or vocational club. New ways of contriving mergers, avoiding taxes or circumventing labor unions amount to so much club chit-chat, but one should always note that club chit-chat on various matters becomes translated into external effective action in society. If club members happen to feel that Jews are not suitable as corporation executives it just so happens, without any fuss or noise, that Jews do not become corporation executives. Smooth, smooth. . . .
Everything about club decisions is in this way informal, offhand, in a low key-- unhurried, unhysterical, gentlemanly. The high pressure atmosphere of the corporation sales meetings is noticeably lacking. *
(*Here, if not elsewhere, the judicious reader may pause and ask himself: "How can a writer, and an outsider at that, be so sure projects are handled so easily on the upper strata? " The answer is: one turns to entirely credible, literal reports. Thus, George Santavana, long a professor of philosophy at Harvard and for many yeares an intimate friend of Charles A. Strong, son-in-law of John D. Rockefeller, report's an incident in the first decade of this century at Rockefeller's Lakewood, New Jersey, between-seasons residence: "One day when I had mentioned Spain, he (Rockefeller) asked me, after a little pause, what was the population of Spain. I said I believed it was then nineteen millions. There was another pause, this time rather longer, and then he said, half to himself : 'I must tell them at the office that they don't sell enough oil in Spain. They must look the matter up. '" George Santayana, Persons and Places: The Middle Span, Vol. II, Charles Scribner's Sons, N. Y. , 1945, p. 134.
Santayana makes this penetrating observation about Rockefeller: "He was beyond comParing himself with his competitors; he compared himself with himself. " Ibid. )
As it seems to me, it has been shown that the finpolitan elite unilaterally makes momentous decisions that in one way or the other, in contexts large or small, are imposed on the country whenever the elite feels its vital interests are affected. Where it does not see its vital interests involved, either collectively or singly, it simply stands aside and lets others decide in issues such as, say, whether or not a new school should be built or whether a park should be located here or there. The finpolitans have little interest in such details and allow anyone who presses to make the decision.
There may be some, however, who will say that I haven't proved my case. Although many other supporting instances could be mentioned in this chapter, it should be evident that for those determined not to accept the clearly warranted conclusion there would be no admission that the case was proved if instance were piled on instance in detailed profusion for hundreds of pages.
One either intelligently sees the force of the proof offered or goes on muttering idiotically forever, no matter how much evidence is adduced, "Not proven, not proven. "
Toward a Domestic Kremlinology
Since World War II and the upthrust of Russia there have emerged "Russian Institutes" in various of the universities, devoted to studying all things Russian. Some of the scholars focus directly on the ruling group in the Kremlin, attempting at a distance, amid considerable difficulty, to deduce what is going on at the top. They pore over Russian newspapers, study the order of precedence of names of officials, examine budgets, make note of who appears and who does not appear at diplomatic receptions, analyze Russian jokes, and subject every conceivable aspect of Kremlin affairs to minute scrutiny.
Many problems challenge attention: Who is the No. 1 man, who is No. 2 and what is the likely line of succession? What are the rivalrous groups within the top leadership and what policies does each stand for? What is the current dominant policy? What are the temperaments of the top men--irascible, bland, suspicious, etc. ?
With this in mind, it may be said that a purely domestic variety of Kremlinology or American finpology could well be developed as a subsection to university departments of political science.
What is the main current orientation of the finpols? What are their alternate policies in the event of a variety of possible occurrences?
Who, if anyone, is the chief arbiter of the finpols? If they have no chief arbiter do they have a committee, a sort of sub-executive committee of the ruling class; or may any accredited person take a hand?
This sub-executive committee, if it exists, has how many members--five, eleven, twenty-six" Where, if it exists, does it meet0at The Links, The Knickerbocker Club or in one of the suites at the Waldorf Astoria Hotel? What does it call itself, if it answers to a name?
Who is the top man or is there collective leadership? What are the respective orders of priority among Richard King Mellon, Crawford Greenewalt and, say, David Rockefeller? Do these ever consult? Does Nelson Rockefeller join them with an admonitory word? Is anyone else ever consulted? Where do they go? What do they say? Do their jokes, if any, have hidden meanings of national or world significance?
Or, if they do exchange views, is such exchanging done through underlings? What, in other words, is the procedure, always assuming there is some sort of at least informal procedure?
The answers to these questions I do not know. That would be something for finpologists to determine. Not to know the answers is not to know what is taking place in an important sector of American government.
But we do already possess certain deductions in finpology analogous to those in Kremlinology in our knowledge of how to determine who is moving to the top in the corporations. As E. Digby Baltzell and Osborn Elliott tell us, one can spot the Coming Men in the corporations by their admission to the metropolitan clubs.