Anexo 3. Resultados de la Entrevista aplicada a los trabajadores

It has been abundantly shown that the members of a small coterie, comparable in relative size to the owning class of the Banana Republics and other unbenign polities, own and control all important economic enterprises in the United States. And now that we have a latter-day insight into the ownership and control of the individual parts, it remains to be shown into what whole these parts fit.

The thesis of this chapter is that the economic system as a whole is principally owned, and mainly though not wholly controlled but certainly decisively influenced, by or on behalf of hardly many more than 500,000 biological individuals (as distinguished from fictitious persons such as corporations). In turn, the political system is very

concentratedly influenced. The instrument of this highly personal influence-control is the large corporation, an Archimedean lever. Ownership in some degree may be claimed by perhaps 10 per cent of the population, most of it in tiny bits, but outside this slice it is largely confined to chattels. Few Americans own more productive property, directly or indirectly, than do benighted Russians, Chinese or Latin American descamisados. This fact is no doubt difficult for those conditioned by domestic mass-media propaganda to accept; yet intractable fact it unquestionably is.

Firms in Operation

The number of American firms in operation as of 1963, the most recent date for which the information is available, was 4,797,000, an increase of 22,000 over 1962. ¹ This figure did not include agricultural enterprises or firms of professionals such as physicians and lawyers. Nearly half, or 2,032,000 firms, were in retail trade, most of them small local retail stores, often in hock to local banks.

Sole proprietorships at the end of 1961 totaled 9,242,000 and partnerships 939,000. ² Gross national product, or the totality of goods and services transferred to consumers by all agencies, public and private, amounted to $554.9 billion in 1962. ³ It

approximated $600 billion in 1965 and may have exceeded $700 billion before this book is published. The national rate of economic growth rose to 5.5 per cent in 1965.

Sales of the 500 largest industrial corporations amounted to $229.08 billion in 1962, or nearly 42 per cent of gross national product. About 65 per cent of these sales, or

$149.4 billion, were made by the 100 largest industrial corporations, $36.2 billion by the next 100, $20.5 billion by the third 100 and $13.2 by the fourth 100. ⁴

The Treasury Department for tax purposes has a category of "active corporations,"

numbering 1,190,286 in 1961. This category with sweeping catholicity includes

corporations in finance, insurance, real estate, services, nonallocable businesses and agriculture, forestry and fisheries. Excluding all such and retaining only the mining, construction, manufacturing, transportation, communication, electric, gas and wholesale as well as retail trade industries in order to obtain a category comparable with that of the big industrial enterprises we have been considering, we have 675,074 active industrial enterprises. ⁵

The total assets of all these 675,074 active industrial and trading enterprises were

$561.778 billion in 1961 ⁶ compared with total assets in the same year of $186.769 billion for the 500 largest industrial companies, $125.734 billion for the 100 largest. ⁷ In 1962 the assets of the 500 had risen by more than $10 billion. More than 30 per cent of the industrial assets of the country, then, was confined to 500 of the largest companies.

Actually, in 1961 companies with assets of $50 million and more among all active corporations, industrial and nonindustrial, well above the range of "small business,"

held the bulk of assets and most of the net income.

The number of such companies was 2,632 or .2 per cent out of the 1,190,286. The

$50-million-asset-plus companies held $812.396 billion out of total corporate assets of

$1,289.516 billion, or nearly 65 per cent. Their net income was $30,027 billion out of

$45,894 billion, or 66 per cent of all corporate net income.

Confining ourselves once again to active industrial and trading companies, we find that 1,073 constituting the $50-million-plus class had assets of $346.922 billion out of total industrial and trading assets of $561.778 billion., or more than 60 per cent, and net income of $24.151 billion or 70 per cent, out of total net income of 35.916 billion. ⁸ Again, one central corporation often owns many other large ones. The big corporations are not always detached entities.

Summarizing, 2,632 active corporations or slightly more than .2 per cent of all active corporations (almost always dominantly owned and controlled by less than .1 per cent of their stockholders) held nearly 65 per cent of all corporate assets for 1961 and got 66 per cent of net corporate income. These 2,632 corporations were those with individual assets of $50 million or more. In the industrial-trading category alone less than .2 per cent ( 1,073 out of 684,075) of corporations, with assets of $50 million or more, held more than 60 per cent of assets and derived 70 per cent of net income.

The vast number of enterprises below the $50-million asset class (and almost 60 per cent of them had assets of less than $100,000) perform only a shrinking marginal

amount of the business of the country. We can therefore with the utmost caution say that most of the productive activity of the United States is in the hands of a tiny number of very large corporations largely owned and completely dominated by a small coterie, almost a junta.

This fact is shown, too, in the figure of $302.536 billion for total sales of the 1,073 largest industrial and trading corporations for 1961, which was nearly 60 per cent of gross national product. ⁹

What have been cited are official government figures and as such may be suspect to some persons who profess deep distrust of all government activity. Let us, then, turn to strictly business sources.

"The 7,126 U.S. companies with more than 100 or more employees (2.5% of the nation's 286,817 manufacturing corporations) account for 90% of total manufacturing assets and 83% of sales," says a widely circulated business directory in referring to 1961. ¹⁰ "The nation's top 13 employers, firms with 100,000 or more workers, have assets of $37.9 billion (15.3% of total U.S. manufacturing assets) and sales of $47.1 billion (13.6% of total sales)."

No matter which source one turns to, the same prospect unfolds: intense

concentration. Slightly more than 7,000 managements, often interlocked, account for 83 per cent of all sales!

Whoever owns and /or controls the large corporations, then, obviously owns and/or controls the lion's share of the productive system, We have already shown how untenable is the idea that such ownership is widely diffused among millions of small shareholders. The small shareholder in the United States stands in the same relative position to the large shareholder as the rank-and-file Communist in Russia stands to the party leadership. Useful, he nevertheless need not be seriously consulted. He carries no more weight than the rank-and-file employee. Corporatively speaking, he is a nonentity, an unperson.

The Cannibalistic Merger Movement>

The smaller enterprises, moreover, are being steadily squeezed out of business or absorbed by the giants, most of which became giants by the cannibalistic process.

There have been three periods in this century marked by waves of American mergers--1900-10, the 1920's and the years since World War II. From 1920 through 1929 there were 6,818 mergers; from 1930 through 1939 there were 2,264; from 1940 through 1949 there were 2,411; from 1950 through 1959 there were 4,089; and from 1960 through 1963 there were 1,978. In most cases larger companies absorbed smaller ones;

in some cases many small companies were suddenly combined into large ones. ¹¹

The word "merger" in actual practice almost invariably indicates that large companies are involved; it is rare for really small enterprises to figure in mergers. Thus in the decade 1951-61, of 3,736 mergers involving the 500 largest industrial and 50 largest merchandising firms--almost all the mergers there were--the largest 100 industrial companies absorbed 884 firms, the next largest 100 absorbed 1,059, the third largest 100 took in 577, the fourth largest 100 absorbed 453 and the fifth largest 100 absorbed 431 firms. Among the merchandising companies the largest 50 took in 332 other companies. ¹²

In the years 1948-60, 33.4 per cent of assets acquired by merger went to companies with assets of $50 million or more and 34.3 per cent of acquired assets went to

companies with assets of $10-$50 million. Assets acquired by companies with less than

$1 million of assets amounted to only 1.6 per cent. The same trend continued into the 1960's up through 1962, the latest date available. ¹³ Since then, the merger movement has taken a new spurt.

The small enterprise, at least rhetorically beloved by many small-town congressmen, has also been steadily driven out of business by failure, a traditional hazard of genuine businessmen as distinct from corporate manipulators. In the period 1921 through 1935 there was a yearly average of more than 20,000 failures (excluding railroad bankruptcy proceedings), with aggregate liabilities averaging more than $500 million and average individual liabilities between $21,000 and $27,000. From 1936 through 1940 the yearly average was 12,064 and in the 1940's it was a little more than 5,000. But in the 1950's the figure started burgeoning again, from 8,058 in 1951 to 14,053 by 1959. In the 1960's it is exceeding 15,000 annually.

Most of these failures are of very small firms. Only in 1961 did aggregate annual liabilities cross $1 billion, where it remained thereafter through 1963, our latest date. In no year has the average individual liability exceeded $100,000. ¹⁴

The figures tell little of blasted hopes in the uneven race toward business success.

It is almost a cardinal rule that only small businesses go out of existence through bankruptcy. The word is encountered only academically on the higher corporate circuit.

One of the effects of the propaganda about business success (propaganda based on a meager number of instances) is to encourage each year thousands of illusion-ridden citizens to jump into the business whirlpool. Unskilled in logical analysis, they

optimistically accept the lopsided findings of Time, Fortune and the Wall Street Journal as representative fact. All they accomplish in most cases, sooner or later, is to enrich with their small bankrolls the coffers of suppliers of business equipment, which is later knocked down to the highest bidder at bankruptcy auction sales. There is a thriving business in the United States dealing, year in and year out, with bankruptcy itself.

By every known sign, entering into business for oneself in the United States is now, and always has been, a highly risky affair. Many are called; few are chosen. And most who remain in business do so on the thinnest of survival margins, constantly financed by short-term bank loans, the constant prey to recessions, regional strikes or even vagaries of the weather. A simple run of unseasonable weather regularly drives out of business hordes of hopeful operators of small resorts, hotels, stores and service enterprises. Many are hopelessly in debt. But in addition to misfortunes of local circumstance there stand in the background the asset-heavy large enterprises, which survive all vicissitudes, like granite cliffs against the sea. Not many German enterprises survived the military disasters that engulfed the Reich this century; but the Krupp family's steel enterprises, for one, did survive and, indeed, are flourishing now as never before. Krupp in Germany could no more be vanquished by overwhelming national calamity than could Du Pont in the United States. What would survive any event, perhaps even atomic warfare, would be titles, patents, formulas, certain key personnel and organization charts. One would, as the saying goes, have to get the country

"moving" again. And who can do this better than Krupps, Du Ponts, Rockefellers, Fords, Pews, Gettys, Rosenwalds and their kind? For, among other things, they have gathered unto themselves administration of the technical "know-how." This is what they have, over and beyond money: general far-ranging administrative authority.

Business versus the Corporation

As applied to the larger enterprises the term "business" has become a euphemism, no longer expressing the intended content of the word. The man who owns and operates a small independent shoe store is a businessman. So, it is implied, are Henry Ford II, J.

Paul Getty, Crawford H. Greenewalt and Roger Blough. Yet these latter basically have no more in common with the small tradesman, either in outlook or mode of operation, than has a juke-box entrepreneur with a musician.

Among the defining characteristics of any business enterprise is that it can fail, can go out of business through bankruptcy. It is risky, in short. But the major corporations can no more fail than can the public treasury. Their risks are all marginal. Their massed financial reserves and other assets are absolute guarantees against total risk and failure.

Beyond this, they are so thoroughly woven into the very warp and woof of society that they are the peculiar anxious and constant concern of sovereign power itself.

This last has been shown in this century in particular in the case of railroads, many of which through gross financial mismanagement--"milking"--have gone through

bankruptcy proceedings in which unpreferred creditors were squeezed out with heavy losses. But reorganization proceedings under the supervision of the federal courts have restored them to formal financial health, often under the same management, bankers and holders of senior obligations. For the railroads serve a vital function in modern society.

The large industrial corporations have never yet had to be individually bailed out of financial difficulties by the government, for they have not experienced overwhelming

individual financial difficulties. Their financial position has been made too secure by monopolistic and semi-monopolistic practices, at times formally adjudicated illegal.

What kind of business is it, then, that is impervious to failure, one of the most basic possible experiences of business in history? If it is indeed a business, then it is

something distinctly new in business history.

Close students of corporations feel driven to employ various devices to differentiate the big corporation from the ordinary corporation, which may indeed fail. There was first widely used the rather imprecise term Big Business. But, as we have noticed, the big corporation is different from the smaller corporation in crucial ways other than mere size. It is not only big but it cannot fail, cannot (as the saying goes) go out of business.

Some specialists then introduced the term super-corporation, ¹⁵ which is better, as it indicates at least some sort of superiority or supremacy. But what is the superiority? The fact of being failureproof? Size?

The big corporation, as a matter of fact, is not a business enterprise at all, at least not in the sense that business enterprise has been understood through history and as it is commonly understood even today. The linguistic habits of people have simply not kept abreast of institutional change.

The big corporation, it is true, does business, engages in trade. But so do the government trading enterprises established by Soviet Russia, which seek profits but which are nevertheless not thought of as businesses or business enterprises. By definitional ukase they are excluded from the business category.

A writer on economic affairs, reflecting on AT&T, shows awareness of the

inapplicability of the term "business" to the functioning of the large companies when he says: "AT&T today is less a company than a quasi-political state." ¹⁶

But not only is AT&T a quasi-political state; many other large corporations are in the same category and, indeed, like AT&T have foreign governments among their large stock-holders. The stock is held as a national treasury asset. But it is not the

participation of governments as investors that makes these entities quasi-political states;

they are that even without any government stockholding. They are, too, more than an integral part of the economy. They are an integral part of the functioning political system, their acts and plans focusing the attention of legislators and political administrators, just as the acts of legislators and political administrators are of

paramount concern to them. Their interests and those of government officials at many points overlap and interlock.

The big stockholders and managers of these quasi-political states, again, are stockholders and managers in some sense different from people ordinarily so

recognized. They not only have more power than the common run of stockholders and managers but they must continually pass judgment and act on a wider spectrum of eventualities, a spectrum as wide indeed as that of any top government leader. What the president of the United States is thinking about is, more often than not, precisely what the big corporate people are thinking about, often in the same terms: war or peace, balance of international payments, treaties, unemployment and wages, gross national product, interest rates, consumer finance, national debt, taxes, etc., etc.

Because referring to these men as corporate leaders or big stockholders or magnates is imprecise, and confusing as well to many (for what, really, is a big stockholder, a man owning a million shares worth $1 each or a million shares worth $500 each?), I have coined a new term for them. They are, according to this term, finpols-- financial politicians. Their political mentalities and acts are shaped by their propertied and institutional positions.

Although not recognized by the general public as politicians, whom cartoonists still regressively depict as men in broad-brimmed black hats wearing string ties and black frock coats, much of the daily activity of the biggest property holders--the finpols-- is identical with the work of government leaders. They are, first, diplomats--so much so that they can be quickly shuttled into the highest formal diplomatic posts. They are, too, manipulators of public sentiment through advertising, public relations subordinates and corporately controlled mass media in general. They make or cause to be made speeches on fundamental public questions, seeking to persuade. They select subordinates,

conduct negotiations with governments, hire and fire high-level corporate personnel, manipulate political parties and, above all, make decisions of national and international import. Most crucially, they have, like the very top governmental leaders, vast financial resources at their fingertips, resources for which they are far less strictly accountable than most government leaders working within constitutional frameworks. They can, and at times do, buy legislators and judges. Most--repeat: most--legislators are on their payrolls.

As far as that goes, many of them or their aids can and do without so much as shifting gears go right into top government posts, where they feel perfectly at home. When Robert McNamara went from the presidency of the Ford Motor Company to become secretary of defense, he simply stepped from one to another large organization. The horizon of Nelson A. Rockefeller hardly broadened when he stepped into the

governorship of New York. Even though he had not previously been in any very high administrative post, the transition from the universal concerns of the Rockefeller family to those of New York State was hardly a move into a wider domain.

These quasi-political states or super-enterprises, then, are a reality. The men with the biggest stakes in them and at their helms are little different from government leaders in function, outlook or means at their disposal. To most cases they far overshadow the

These quasi-political states or super-enterprises, then, are a reality. The men with the biggest stakes in them and at their helms are little different from government leaders in function, outlook or means at their disposal. To most cases they far overshadow the