NOTES

CHAPTER TWO

1. New York Times, June 22, 1965; 24:1-3.

2. The late C. Wright Mills in The Power Elite, Oxford University Press, N.Y., 1956, a book which has its merits, involved himself in several methodological snarls in a vain attempt to get some precision into the figures about the big owners. "To list the names of the richest people of three generations, I have had to do the best I could with such unsystematic sources as are available" (p. 375). He settled "mainly [as] a matter of convenience" on $30 million upward for a large fortune (the criterion of America's Sixty Families), which yielded him 371 names. But he had to throw out 69 of these because no sources gave any information about them (p. 379). Thus he had left 302 names to play with. The sources of these were books he cites by Gustavus Myers, Matthew Josephson, Frederick Lewis Allen, Ferdinand Lundberg, Dixon Wecter, Stewart H. Holbrook, and Cleveland Amory; he also had recourse to Fortune and The World Almanac. He accepted as generally accurate the computations of America's Sixty Families, based on 1924 income-tax revelations, because the subsequent probate of various wills attested to their close accuracy. He nevertheless suspected (and justifiably) that with the passage of time there was more to be known. He thereupon set out upon a frantic and confessedly quest for new information. "In order to obtain information about people now alive," Mills wrote (p. 378) "the following agencies and government bureaus were contacted--various officials in each of them gave us such information as they could, none of it 'official,' and none of much use to us: The Federal Reserve Board [sic] of New York; the Securities and Exchange Commission; U.S. Department of Commerce, Bureau of Domestic Commerce; and the Bureau of Internal Revenue's Statistical Division and Information Division. Individuals were also contacted in the following private organizations: Dun & Bradstreet; The National Industrial Conference Board's Division of Business Economics; The Wall Street Journal; Barron's; Fortune; The Russel Sage Foundation; U.S. News and World Report; Brookings Institution; Bureau of National Affairs; Federal Savings and Loan; and two private investment houses. People seen in these organizations could only refer us to sources of which we were already aware. Some had never thought much about the problem, others seemed slightly shocked at the idea of 'finding out' about the top wealthy people, others were enchanted with the idea but helpless as to sources." Yet Fortune, only a year later, perhaps inspired by Mills's report of his massive difficulties, in its issue of November, 1957, was able to reel off, albeit with some exaggeration, the names of a goodly number of fairly new but theretofore not obscure heavy-money men that Mills's dragnet was apparently not fine enough to catch. And this reminds us of the no doubt over-inclusive observation of the novelist James T. Farrell that a sociologist is a person who will take a grant of $100,000 and a staff and pinpoint in a year the location of the brothels in a given city area, missing only a few, while the ordinary man will get complete information in five minutes by asking for it from the cop on the beat.

Mills, for most of his contemporary information, was forced back to the 1924 tax figures as analyzed in America's Sixty Families but he worked up a number of obscure quarrels with their derivation. His first methodological refinement was to add the New York Herald Tribune to the New York Times as a source although, if he was going to do this, why did he not take all metropolitan newspapers? He took note anew in this way of the fact reported in America's Sixty Families: "The release of this data was so administratively sloppy that one paper published data about a man whom another paper ignored, some errors were printed, and in some cases all journalists missed the names of people who were known to have paid large taxes." The point, actually, is that none of the papers provided relevant information going beyond the Times. Mills, thanks to his combing of the Herald Tribune (with which as a former staff member I was hardly unfamiliar), was able to come up with two new names: J. H. Brewer and L. L. Cooke. But he was unable to identify them and after pulling them out of the lists like a joyous Jack Horner he never referred to them again. As Mills notes they, like a number of people, "paid much higher taxes in 1924 than many of the people named by Lundberg, but who are not included in his listing of '60 families.'"

Mills seemed to believe that the names for the sixty families were drawn from the tax lists. Although most of them were there, the lists did not determine their inclusion, for which the simple criteria of social presence sufficed (the cop on the beat). From time to time various people, of no great financial or political account, have "windfall" incomes, subject to large taxes; passingly noteworthy, they cannot be considered part of any financial elite, and in America's Sixty Families their general existence was noted and thereafter ignored. Mills remarks further that America's Sixty Families includes families in the top sixty that "do not even appear among the rich when individuals [my emphasis--F. L.] are concerned." Why they should when it is a question of families Mills did not make clear. A family with a hundred members each getting $100,000 a year (the pattern of some actual families), all from the same source, certainly bulks larger financially than an individual getting $2 million a year. There are family investment companies set up in this way and, although the individual incomes are widely dispersed and of little significance, the investment and political influence of the managing members is of the reach of about $200 million as compared with about $50 million for the recipient of a $2 million income. On concentrated size alone the family group has the stronger punch.

Again, Mills remarks enigmatically, "Ferdinand Lundberg, in 1937, compiled a list of '60 families' which, in fact, are not all families and which numbers--as 'families'--not 60, but 74. But he does not analyze them systematically. By 'systematic' I understand that similar information is compiled for each person on the list and generalizations made therefrom" (p. 377). As to this Mills is correct in a certain trivial way for there were two groups of families listed as belonging, respectively, to the Morgan and Rockefeller camps, adding up in each case to stupendous holdings. Yet each single family was sufficiently impecunious to remain probably below the $30-million level at 1924 prices. "What Lundberg does," Mills summarizes, "is (1) generalize blood relations--sometimes cousinhood only--into power and financial cliques. [For the financial and political importance of cousinhood "only" one might study the Mellons and Du Ponts.--F. L.] We do not wish to confuse [!] the two. In addition (2), we cannot go along with the list he has abstracted from the New York Times, which is not uniformly made up of families or individuals or companies but is a miscellany." But Mills produces no better or more systematized list, unless his adding of the mysterious J. H. Brewer and L. L. Cooke yields one. Again, the Herald Tribune list was no less an unsystematic as well as duplicative miscellany.

Mills himself generalizes the individual possession of $30 million or more into power eliteness, which is hardly tenable in view of the fact that some such possessors are in homes for mental deficients and others are playboys--what newspapers call sportsmen, clubmen or explorers when they feel they cannot plausibly apply the terms philanthropist, financier or industrialist. Mills, again, going against the brute facts of history in his search for symmetry, boldly casts out the names of people whose holdings do not seem to exceed $30 million but who have nevertheless played strong public roles. Thus, he discards Tafts, Lehmans and De Forests as well as Deerings (intermarried with the McCormicks) even though at the time he wrote they certainly included individuals worth more than that. If one accepts the thesis of a functioning "power elite" as constructed by Mills (which I do not, for reasons to appear later in the main text), one cannot so cavalierly dismiss Tafts, Lehmans and Deerings from the cast. Mills finally approached the symmetrical world of his own making (p. 380): "For each generation I took the 90 richest people. We are thus considering the 90 or so most prominent and richest in each of three historical epochs. This gives us a total of 275 cases for concentrated analysis, which is the upper 74 per cent of the 371 cases mentioned by all sources known to us. Of the 90 cases elected as Group I, the median year of birth is 1841; the median year of death, 1912. The year when the median age is 60 is therefore 1901; hereafter Group I is identified as the 1900 generation. Of the 95 cases selected from Group II, the median year of birth is 1867; the median year of death, 1936. The year when the median age is 60 is therefore 1927; Group II thus consists of the 1925 generation. Of the 90 cases in Group III, the median year of birth is 1887; and most of these were still alive in 1954. On the average there were 60 in 1947; thus Group III is thus the 1950 generation." Mills does not list the names for inspection or actually produce a concentrated analysis. He proceeds to draw very precise percentages for his text (Chapter 5) about class origins, nativity, schooling, rentier-activist status, Social Register listing and so on. And it is these percentages, perpetrating the fallacy of misplaced precision, that need to be looked upon with some questioning. One can, faut de mieux, live with them; they make no difference to any open issue. As to his conclusion that most of the wealthy now largely come from the wealthy classes in contrast with an earlier day, Professor Pitirim Sorokin of Harvard pointed this out in 1925 (cited at page 21, ASF). Mills's tight divisional categories present certain problems: Is a man rentier or accumulator whose income derives half from inherited trust funds and half from creative scheming? Are the Du Ponts (some of whom run their companies, others of whom apparently only cash dividend checks) rentiers or activists? Actually, all of the inheritors are rentiers most of the way. On the basis of their rentier status they may then be playboys or playgirls, or active in corporate affairs and politics. Mills's misplaced precision--for the field is no more subject to such statistical precision than is the wreckage of a battlefield after the battle--leads him to conclude that "men have always held from 80 to 90 per cent of the great American fortunes" (p. 110). But as we have already learned from Professor Lampman (Chapter I), working with complete official figures, women constitute very certainly about 40 per cent of all holding more than $60,000 of property. They could, of course, only be holding the lesser estates but, as most big wealth now is inherited and the incidence of women inheritors is about the same as men, there is no visible reason why the Lampman distribution should not prevail approximately in all strata. On Mills's showing, the number of very wealthy women in his contemporary group of 90 would range from 9 to 18. But much wealth is held in family trust funds, with males and females participating equally. Women, moreover, belong more than passively to any hypothesized "power elite," as the physical presence of Perle Mesta, Clare Boothe Luce, Cissy Patterson and similar female politicos shows. Mills inclines to accord women, by reason of such butterflies as Barbara Hutton and Doris Duke, a purely passive role in his mythical elite.

Actually, according to a study made in 1958 by Professor James Smith, an economist with American University, about 40 per cent of all owners of property valued at $1 million were women, but about 80 per cent of owners of the estates valued at $10 million or more were women. Two careful studies, then, show Mills to have been very wrong on the relationship of men and women to propertied wealth, although in most cases women became proprietors through men: fathers, grandfathers, uncles, brothers and husbands. They usually outlive husbands, thus becoming heirs; often they are the much younger second and third wives of tycoons.

By some misstatement of theses owing to inattentive reading, Mills is able to supply pseudo-corrections, as when he says that "Sixty glittering, clannish families do not run the American economy..." (p. 147). Nor did anyone ever say the did. America's Sixty Families, to which he thus alludes, opens with this paragraph: "The United States is owned and dominated today by a hierarchy of its sixty richest families, buttressed by no more than ninety families of lesser wealth. Outside this plutocratic circle there are perhaps three hundred and fifty families, less defined in development and in wealth, but accounting for most of the incomes of $100,000 or more that do not accrue to members of the inner circle." While this statement would require some revision today, it is not the statement Mills represents it to be.

With a view to commenting finally upon the methodological difficulties of work in this field, since Mills saw fit to bring them up, let me say that America's Sixty Families began as a study of just a few of the very rich families, with a view to finding common characteristics, but this intention had to be abandoned owing to lacunae in the record of each. Where data were available for one, they were lacking for the other. The study was therefore broadened to bring in more families and more data just as statisticians enlarge a sample. As with Mills, a cut-off point had to be determined on what was considered big wealth, and the figure of $30 million was arbitrarily decided upon--even though I didn't think a man worth $29.5 million was qualitatively less worthy of consideration. It was found that sixty fortunes of varying size fit that category, taking the Rockefeller and Morgan satellites as each constituting a group (because it was known on other grounds that they belonged in the picture), although it was pointed out that there were two lower strata of 90 and 350 each that would be resorted to for characteristic behavior when data were lacking for the top 60. This procedure was perhaps more systematic than the situation warranted but a book is a systematic discourse and some organizing principle is necessary.

Even leaving aside the question of an organizing, principle (of which Mills's "power elite" is one such) and simply calling it all "history," and therefore "open" in organizing principle, would not have solved the problem. For written histories are themselves tightly organized. They are not as "open" as historical events but are put in some sort of theoretical matrix. To this extent at least they may be misleading. But, leaning now toward more "openness," I have titled the present work simply The Rich and the Super-Rich. I still believe that the family is the significant unit of holding wealth for the simple reason that it is through the family that the laws of inheritance and the transmittal of money power takes place.

3. "The Fifty-Million-Dollar Man," Fortune, November, 1957.

4. New York Times, July 3, 1961; 9:2.

5. Ibid., November 27, 1962; 43:7.

6. Ibid., May 9, 1964; 28:6.

7. Ibid., December 6, 1958; 14:1.

8. J. Paul Getty, My Life and Fortunes, Duell, Sloan and Pearce, N.Y., 1963, p. 258.

9. Ibid. pp. 55, 122-29.

10. Ibid., 127-29, 135, 138-46.

11. New York Times, September 13, 1963; 35:3-7.

12. Getty, pp. 259-60.

13. Hunt's wealth has been estimated as high as $3 billion, according to Arnold Forster and Benjamin R. Epstein, Danger on the Right, Random House, N.Y., 1964, p. 136. No evidence I have been able to find lends credence to any such figure or even to the more frequently cited figure of $1 billion.

14. Information about H. L. Hunt was obtained mainly from Robert G. Sherrill, "H. L. Hunt: Portrait of a Super-Patriot," The Nation, February 24, 1964; Cleveland Amory, "The Oil Folks at Home," Holiday, February, 1957; "The Land of the Big Rich," Fortune, April, 1948; "The World's Richest Men," New York Times Magazine, October 20, 1957; "Venture in Pakistan," Newsweek, September 26, 1955; New York Times, August 17, 1964; 1:3; August 23, 1964, 111; 1:3; Washington Post, February 15-19, 1954; and "World's Richest Man Is a Texan," Pacific Coast Business and Shipping Register, August 16, 1954.

15. John Gunther, Inside U.S.A., Harper and Brothers, N.Y., 1947, p. 816.

16. Information about these men has been gleaned from "Big Wheeler-Dealer from Texas," Fortune, January-February, 1953; "Henry Holt and the Man from Koon Kreek," Fortune, December, 1959; "Murchisons and Allen Kirby," Life, April 28, 1961; "Kirby's Fight to Hold Allegheny," Fortune, April, 1961; and Holiday, February, 1957.

17. Cleveland Amory, "The Oil Folks at Home."

18. 'Why Things Went Sour for Louis Wolfson," Fortune, September, 1961.

19. Stewart Alsop, "America's New Big Rich," Saturday Evening Post, July 17, 1965.

20. See, for example, "The Paper World of Karl Landegger," Fortune, November, 1964.

21. Forster and Epstein, p. 244. The figure was first used by Dan Wakefield, Esquire, January, 1961, and has been repeated many times in newspapers from coast to coast.

22. New York Times, October 6, 1958; 31:1.

23. Time, March 4, 1957; 69:7.

24. New York Times, October 6, 1958; 31:1.

25. Moody's Industrial Manual 1964, p. 2079.

26. Ibid., p. 2528.

27. Ibid., p. 2040

28. Forster and Epstein, pp. 242-43.

29. Arthur Schlesinger, Jr., "A Thousand Days," Life, July 16, 1965, p. 36.

30. Who's Who in America, Vol. 33, 1964-1965

31. Ibid.

32. Ibid.

33. Ibid.

34. Julian Dana, A. P. Giannini, Giant in the West, Prentice-Hall, Inc., N.Y., 1947, pp. 221, 342-43.

35. National Cyclopedia of American Biography, Vol. 41, p. 11.

36. New York Times, July 31, 1957; 10:3.

37. National Cyclopedia of American Biography, Vol. 47, p. 42.

38. Cleveland Amory, The Proper Bostonians, E. P. Dutton & Co., Inc., N.Y. 1947, p. 315.

39. Information on De Golyer in greater detail is to be found in the National Cyclopedia of American Biography, Vol. 43, PP. 12-14; and in Biographical Memoirs, Vol. XXXIII, National Academy of Sciences of the United States of America, Columbia University Press, N.Y., 1959.

40. New York Times, December 15, 1956; 26:1.

41. Cleveland Amory, "The Oil Folks at Home."

42. Biographical Memoirs, p. 67.

43. Fortune, November, 1957, p. 236.

44. New York Times, October 19, 1950; 31:6, and October 26, 1950; 21:2.

45. National Cyclopedia of American Biography, Current Volume F, p. 46.

46. New York Times, September 2, 1956; 26:1.

47. National Cyclopedia of American Biography, Vol. 43, p. 486.

48. Details about William Danforth are taken from Gordon M. Philpott, Daring Venture: The Life Story of William H. Danforth, Random House, N.Y., 1960, an appreciative biography obviously written with the deep personal feeling of a happy associate. Although Danforth was listed in Who's Who he is, oddly, not mentioned to date in the National Cyclopedia of American Biography, the Dictionary of American Biography or Current Biography, 1940-65. On his death the New York Times, December 25, 1955; 48:7, gave him not very extended notice; but it was just like Danforth to die on Christmas Eve. Easter was his only other option.

49. The saga of these men, once-reputed fortune-builders, is outlined in Earl Sparling, Mystery Men of Wall Street, Greenberg, N.Y., 1930.

50. New York Times, July 23, 1936; 19:6. The unblaze of unglory at Cutten's end may be traced through the Times, March 11, 1936; 6:2; June 25, 1936; 21:3; December 29, 1936; 7:4; January 10, 1937; 30:7; April 15, 1937; 42:7; May 20, 1937; 15:2; September 21, 1937; 26:2 and June 13, 1940; 25:6. Although this last item is indexed by the Times, it is not on that page.

51. The flamboyant career and downfall of Zeckendorf are extensively noticed in the New York Times, May 8, 1965; 1:2, and May 19, 1965; 1:5. Zeckendorf's career began in 1938 when he joined the obscure real estate firm of Webb & Knapp, which soon bloomed as a high-powered promoter. To obtain money for his gaudy ventures Zeckendorf was said to pay as high as 24 per cent interest.

52. The New Millionaires and How They Made Their Fortunes, by the editors of the Wall Street Journal, McFadden-Bartel Corporation, N.Y., 1962.

53. Ibid., p. 9.

54. Ibid., p. 10.

55. Ibid., p. 9.

56. Ibid., pp. 17-24.

57. Ibid., pp. 25-32.

58. Ibid., pp. 33-39.

59. Ibid., pp. 40-46.

60. Ibid., pp. 54-61.

61. Ibid., pp. 62-70.

62. Ibid., pp. 70-75.

63. Ibid., pp. 75-80.

64. Ibid., pp. 85-89.

65. Ibid., pp. 90-98.

66. Ibid., p. 90.

67. Ibid., pp. 113-22

68. The discovery of the astute Goldman and Di Lorenzo is extensively reported in the New York Times, April 26, 1965; 1:7,8, and their names should be included on any future Fortune $75-plus million list unless something untoward should happen, such as a jerk in the business cycle.

69. "Non-Poverty Program: Millionaires Are a Dime a Dozen," New York Times Magazine, November 28, 1965, p. 50.

70. Alfred P. Sloan, Jr., My Years with General Motors, Doubleday and Company, Inc., N.Y., 1964. "Mr. Brown defined return on investment as a function of the profit margin and the rate of turnover of invested capital. (Multiplying one by the other equals the per cent of return on investment ... you can get an increase in return on investment by increasing the rate of turnover of capital in relation to sales as well as by increasing profit margins" (pp. 141-42). Brown's method of financial analysis, which Sloan describes in reverent detail, enables General Motors to determine at any instant the current profitability of any nook or cranny in its vast maze. For Brown was not analytically interested in the rate of return on total invested capital, a fuzzy figure that conceals many financially inefficient operations. It doesn't tell one where to go to eliminate inner drags on profitability. General Motors can probably determine precisely the rate of return at any moment on any department, machine or individual down to an office boy or night watchman.

71. Robert E. Lane, Political Life, The Free Press, N.Y., 1965, p. 106.