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Six
WHERE ARE THEY NOW?
As the TNEC data are more than twenty-five years old the question
naturally arises: Are these large holdings of wealth still extant? Have they not
been destroyed by ruthlessly vicious taxation? Aren't the large heirs--under pressure
not only of a monstrous tax burden but of militant trade unions, draconic government
regulation, intense competition with each other, hostile legislators, public welfare
schemes at home and Communist inroads at home and abroad--really in reduced and increasingly
precarious circumstances?
The sociologist C. Wright Mills, as noticed in Chapter 2, note 2, found difficulty in ascertaining who was wealthy. He spent a good deal of time making inquiries of people supposed to know and who, though sympathetic to his quest, found the question of identities equally mysterious. He was reduced to culling names as they had been more or less randomly mentioned in various books and by authors dealing with unsystematic data and constructing his own architectonic symmetries from them.
While it cannot be claimed on the basis of any available collection of data that one has unearthed every wealthy person and clan, the means are at hand for making far better contemporary determinations than did Mills, who was apparently not aware of the monumental TNEC data. But even the TNEC findings are continually being supplemented in monthly reports of significant securities transactions, required by law, to the United States Securities and Exchange Commission (SEC), Moreover, any new issuance of securities by an existing company, or in the launching of a new company, requires that information be supplied to the SEC about major individual participations in ownership. This information is open to public scrutiny.
The reports to the SEC are tabulated alphabetically and published each month in the Official Summary of Security Transactions and Holdings, published by the United States Securities and Exchange Commission, All persons can consult back numbers in any central metropolitan public library or can subscribe to the publication at $1.50 per year.
Under the Securities and Exchange Act, 1934, all corporate officers, directors, closed-end investment companies and individual nonofficer owners or beneficiaries of 10 per cent or more of any securities issue of any company offering securities for sale in the American market must report each month all purchases, sales or other transfers of securities in any company in which they have a direct or indirect interest.
This requirement in some ways provides far more data than did the TNEC study. For it relates to all security-selling companies, not merely the 200 largest. And while, unlike the TNEC study, it does not single out the largest stockholders as such, the requirement that stockholders owning 10 per cent or more of any issue report changes in investment position often discloses the biggest elements. If someone owned only 2 per cent of an issue but was among the twenty largest stockholders, the SEC reports, unlike the TNEC study, would not disclose him unless he was also an officer or a director.
To some extent the 10-per cent requirement partially screens big wealth, which is held mainly in family phalanxes. For if three buyers or sellers each held 9.9 per cent of the stock of a big company, amounting to 29.7 per cent control, the SEC reports would not show them unless they were officers or directors. The same would be true if ten members of a family each owned 5.5 per cent of the stock, amounting to 55 per cent or absolute control. They could be represented on the board of directors by nominees, their own lawyers or bankers, who might hold only a few directors' qualifying shares.
Not only do the SEC reports show purchases and sales but also acquisitions or dispositions by bequest or inheritance, compensation, corporate distribution, exchange or conversion, stock dividends, stock splits, redemptions and gifts. While personal gifts of stock are strewn throughout the year (apparently in observance of birthdays), Christmas appears to be a favorite time of the propertied for giving stock. The Christmas gifts are especially reflected in the January and February reports for each year.
What the SEC reports do not tell us about wealth-holdings would perhaps be a better guide than the statement of what they do contain.
The SEC reports do not inform us at all about (1) federal, state and municipal bondholdings (although they do inform us about corporate bondholdings and about all senior and junior issues); (2) noncorporate real estate, land or mortgage holdings; (3) personal interests in enterprises abroad that do not offer securities in the American market; (4) holdings of noncorporate promissory notes, options, cash, foreign exchange, insurance policies and collections of jewels or objets d'art; or (5) miscellaneous personal property, such as Swiss bank accounts, racing stables, foreign islands, yachts, airplanes and cars.
It is not our intention to determine the exact extent of participation of any fortune in a particular property, although the TNEC study did make such a determination possible with respect to the largest corporations. Nor is it our intention to determine the exact investment position of any fortune at any given moment. Such a determination could only be made by a new government study or by a Permanent National Economic Committee; even the TNEC study did not inquire into stockholdings below the top twenty, although a person could be incalculably wealthy if he was the twenty-first largest stockholder in many companies. Nor is it our intention to trace shifts in holdings among various companies, although in certain cases such shifts are clearly shown by SEC data.
Despite the logical possibility of concealment of a fortune in, say, tax-exempt bonds or jewels, it should be noticed that no big fortune was ever made in such investment media. The modern corporation, plus engineering technique, more recently aided by huge government contracts, is the big and virtually exclusive instrument of modern fortune-building, and a fortune once made cannot disappear from view merely by going into tax-exempts or real estate. One can usually trace it, as in the case of Delphine Dodge, at least up to the point of its conversion into more static media.
Even with the help of the voluminous SEC reports, it is possible to lose exact trace of some large fortunes although, having no evidence of their destruction, one knows they must still exist in some form. Individuals or groups owning 15 per cent of enterprises scrutinized by the TNEC may have halved their participation and spread the proceeds of sale among various companies. If they do not function as officers or directors or hold at least 10 per cent of some company, their further transactions are not reported by the SEC.
Lamentable though this may appear, it does not impede us by much for most of the large interests stay put. They are more likely to increase their holdings as J. Paul Getty and the Du Ponts have steadily done to the date of this writing, than to reduce them. If they merely retain their holdings, new investments are apt to be made with income from the old investments, thus obtaining desirable diversification as a shield against changes of various kinds: technological, political, cultural, economic and social.
Aims of SEC Reports
The object of the SEC reports was to terminate the rigging of securities markets, prevalent before the passage of their enabling law. Before the law was passed, company officers, directors and leading stockholders (while issuing optimistic or pessimistic reports) would secretly sell or buy the company's stock on the basis of knowledge at variance with the reports. A large public of gullible small stockbuyers was in this way repeatedly stung and tended gradually to lose faith in the riproaring Republic for which an earlier gullible horde had bled and died.
Under the securities law, insiders cannot long keep to themselves favorable or unfavorable turns in a company's outlook. Again, what they say can be evaluated in relation to what they actually do in their own securities.
Buying and selling by insiders do not invariably indicate something about a company. Insiders, too, have been wrong in their estimates of a company's position in the context of public policies and conditions. Sometimes insiders sell some of their holdings because they need money for taxes, because they see a better opportunity elsewhere or because they have a fixed policy of taking low-tax capital gains in companies with low dividend payouts. Usually it means only that they are taking profits or avoiding losses.
Some small market operators mechanically follow the buying and selling of insiders, but not with universally fortunate results. Everything else being equal, as it seldom is, it is not a bad policy to pay heed to company officers and directors when they buy or sell heavily. For this reason the SEC monthly reports are closely studied by market aficionados. But company officers, playing only for swings in the market, often sell as quickly as they buy and the knowledge is only available a month later-sometimes too late for outsiders.
One thing the SEC reports show clearly is that in many companies the officers and directors repeatedly buy and sell as a block. Presented to the country as masterful managers of giant enterprises that are the envy of the world, as builders of the nation indeed, they nevertheless in many cases seem interested in playing this private poker game which has no economic justification. It does nothing for gross national product. In so doing they show they are basically Pecuniary Men willing to turn their attention to anything that will swell their bankrolls. If they could go out on the corner and make money by trading baseball cards or stamps the way children do, or lagging pennies, one would find them out on the corner. Their icon is the stock ticker.
Different companies have different policies about timely flutters in the securities market by officers and directors. In some cases such transactions are rare. In many companies it is apparently thought to be one of the perquisites of officers to trade tip and down in a percentage of their holdings, thus incurring low capital-gains taxes while getting more income so their wives and children won't fall behind on country-club dues.
With such factors in mind the monthly SEC reports on holdings have been selectively checked with a view to updating the TNEC data, thus reassuring anxious critics that our material is all fresh and new. But, in general, in-and-out trading by mere company officers and directors has been ignored here except when it has seemed to be of significant proportions or by significant officers.
Attention has been concentrated pretty much on the original TNEC list and the 1964 Fortune list of the largest nonfinancial companies, although there is also presented an extensive listing of control groups in other well-known companies.
As to the method used in examining the SEC reports, which embrace thousands of companies and tens of thousands of individuals: The reports have been closely scrutinized in their entirety from 1960, inclusive, through 1965. As every transaction registered requires that the net remaining holding be given, one is assured of what the latest position is, confirming or not the TNEC finding at a distance of about twenty-five years. In this way, too, late-coming names of big holders (if they buy or sell) are brought into view.
Where significant large holdings have not turned up in this 1960 decade, a special tracing backward by individual companies was made prior to 1960 to ascertain the latest date when a net position was given for some family member (thus showing the continued presence of the family).
In certain companies the holdings were traced back to 1945 or to the point that yielded the latest total holding. Such a complete tracing was made of all the major Rockefeller, Mellon, Ford, Du Pont and Rosenwald properties; it was not necessary in the case of others because their presence is fully revealed by the data of the 1960's in almost all cases.
What may seem to be a defect in this method, and perhaps it is a genuine defect, is that by stopping the retroactive survey with 1960 we won't pick up any new investments made by either new or old wealth-holders prior to 1960. But the objective here is not to show the entire investment position of either new or old wealth-holders or to trace all these elements from one company to another in such cases in which they have transferred investment allegiance. All I am trying to do is to show who is rich now and who is a big newcomer to riches by presenting some large samples.
Nor am I trying to develop in detail the names and holdings of every one of 90,000 or more millionaires. Limited space makes it necessary to confine attention to the cream of the crop.
In the case of some of the new companies, I have examined the original prospectus filed with the SEC, as required by law, to ascertain any significant changes in holdings and identities. Particular attention was given to the new public utility operating companies organized out of the old holding companies, because as matters stood in the earlier chapter we tended to lose sight of the owners in the shuffle. The question is: Are they still there? If not, who has taken their place?
We are initially armed with the fact that these companies aren't owned by just anybody out of 190 million-odd in the population. Even the most tenuous kind of ownership puts the owner into about 10 per cent of the populace. And any holding of any kind worth minimally $60,000 net as of 1953 places him within 1.6 per cent of the population. The holdings with which we are most concerned are limited to a circle consisting of 0.11 of 1 per cent of the population.
Thus narrowed, our attention is focused directly on the biggest American proprietors--the magnates, the big shots.
The SEC requires that reports of a person's entire interest be made if there is any change. in any holding in which he has a beneficial interest. This means that his personal holdings, those in which he has an indirect beneficial interest as from a trust or family holding company, those held by a spouse, those for which he acts as trustee or custodian, must all be reported if more than 100 shares are bought or sold in any part of the holding, direct or indirect. A good picture is therefore given of particular beneficial interests.
While such reporting is for individuals--except when made by a closed-end or family investment company--the holdings of big financial groups are revealed through different transactions on behalf of various members of a family.
It is true that this method will not reveal the holdings of an entire family group in a particular company unless every member of the group engages in transactions, as they sometimes do. But we already know the names of the big family groups so that if we see one member altering his investment position it may be deduced that the others are still solvent but are merely not interested in buying or selling.
We cannot tell in every case who is better off or worse off. A family group may have closed out a very large holding and diversified its ownership in smaller slices in many companies. The new diversified position may have improved its position or not. In dollar values, owing to the general inflation of prices, probably all positions have been improved. At the very top, among Mellons, Du Pouts, Rockefellers, Rosenwalds, Fords and Pews, we know that relative positions have been improved because their companies have outperformed the economy, sometimes by very wide margins. Comparisons can be made here by relating gross sales to gross national product, gross income to national income and net income to net national income.
The reports are set down by the SEC in the following general form:
Transaction Net Holding John Doe ± X shares X shares Trust X1 do. X2 do. Savings fund X2 do. X2 do. Employer's fund X3 do. X3 do. Wife or family X4 do. X4 do. As trustee X5 do X5 do. As custodian X6 do. X6 do. Investment company X7 do. X7 do. Partnership X8 do. X8 do.
The plus-or-minus, indicating a purchase or sale, is credited in the SEC report to whatever individual or instrumentality did the buying or selling.
It would require too much space here to report individual by individual in this way. A somewhat different form of presentation has been adopted to convey the same information.
Our findings will be set forth as much as possible in semi-tabular form. Although share totals will be given, they will not be translated into market values. This task may be left as an exercise for the interested reader, who will be given the 1965 prices for the biggest companies.
As a foretaste of what we are after let us ask, for example, how do matters stand in the late 1960's with J. Paul Getty? Is he still rich? The SEC Official Summary, September, 1965, informs us that he personally owned 4,610,217 shares of the Getty Oil Company and was an indirect participant in trusts with 7,948,272 shares--a total of 12,558,489 shares or about 80 per cent. At a price of 34-7/8 for Getty Oil on November 22, 1965, this holding had a market value of nearly $438 million; in late 1967, $1.2 billion.
This figure by no means represents everything owned by Getty, who is interested directly and indirectly in many other companies, but it does satisfy us that he is still very rich, probably worth more than a billion. And that is all we are concerned with. For many years, he and his companies have been steadily adding to their holdings. The SEC report for July, 1965, showed Getty Oil owned 4,077,240 shares of Mission Development, a different company. The report for December, 1963, showed that Getty Oil, after buying 21,169 shares, owned 2,748,883 shares or 63 per cent of Tidewater Oil Company, in which J. Paul Getty through a trust fund owned now only 4,225 shares. He owned none directly, having exchanged his earlier Tidewater stock for Getty Oil stock. The report for June, 1964, showed that Mission Corporation in turn, after buying 8,500 shares, owned 3,431,280 shares of Skelly Oil Company. These are all majority ownerships.
We could go on in this way analyzing the multifarious holdings and interholdings of J. Paul Getty but we would never get to the bottom of it in any event. For Getty, like many others, is a big foreign operator and unquestionably does not have all his holdings registered on the American record.
Getty is clearly officially certified as still in possession of vast wealth. But we must continue, as there may be gnawing doubts about others, such as Rockefellers and Pews, Pitcairns, Do Ponts, McCormicks and Rosenwalds, Clarks and Dukes. 1
In requiring reports of a beneficial interest in trust funds and of holdings as a trustee, the law reveals a large portion of the social security system of the rich. It is an excellent system, and provides much security for its beneficiaries. But in considering it, one wonders about the oft-heard thesis of many conservative and ultra-conservative spokesmen and newspapers that the federal Social Security System, the Family Welfare System and the trade-union system all carry great danger of destroying the characters of the participants. They might, among other things, become mercenary or lazy.
The rich themselves very evidently do not believe that being the beneficiaries of huge trust funds has undermined their characters, or that establishing trust funds for their children will distort the children's characters. No case has come to light where the children of the wealthy have been left penniless for their own benefit. All known cases of disinheritance are punitive, because the children have displeased the parents. Why, if drawing benefits without labor from a big trust fund does not destroy character, will drawing benefits in old age from Social Security or a pension system do so? Why would a true Welfare State be injurious to the general public when a private welfare system of trust funds is not apparently injurious to its limited number of beneficiary heirs?
The Du Ponts Today
As it is never wrong to begin with the Du Ponts in any discussion of American wealth, let us begin with this fabulous clan, leveling our fundamental question: Where are they now, financially speaking? The evidence strongly suggests that they are still massively concentrated in Christiana Securities Company, E. I. du Pont de Nemours and Company, General Motors, Remington Arms and other enterprises of the kind they were partial to in the 1930's. They stand approximately where they were shown to be in the TNEC study. They have neither gone elsewhere, suffered diminution, become bored with property ownership nor disappeared. Taxes have not exterminated them or even visibly shaken them.
Some revelatory SEC reports by members of the Du Pont family in the 1960's are, incompletely, as follows (dates refer to monthly issues of the Official Summary of Security Transactions and Holdings):
Christiana Securities Company Price range 1965: $232-$315
Shares Date Reported
Irenée du Pont, Jr 150,460 March, 1965
Trust 22,322
A. Felix du Pont, Jr. 20,510
Trust 92,132
L. du Pont Copeland 252,657 August, 1964
Trust 100
Crawford H. Greenewalt 52,848
Trust 4,410
S. Hallock du Pont 140,000 March, 1964
William Winder Laird 88,546 August, 1963
R. R. M. Carpenter, Jr. 11,520 February, 1963
Trusts 130,995
Pierre S. du Pont 29,472 October, 1961
Lammot du Pont Copeland,
through Delaware Realty
and Investment, merged
with Christiana 52,299*
*Shares of Delaware Realty and Investment
These holdings vary from year to year. Some of the Du Ponts are, from time to time, fairly active traders in a marginal percentage of their holdings. And while they do not reflect the entire holding of the Du Pont family in Christiana Securities, for which the TNEC study showed the family owning 73.958 per cent of common and 58.541 of preferred prior to its absorption of Delaware Realty (of which the family owned 83.985 per cent), what these deals since 1960 do positively show is that the Du Pont family is today still ensconced where it was found to be by the TNEC inquiry. 2
As for E. I. du Pont de Nemours and Company, the world's largest chemical company, the SEC reports show the following incomplete recent holdings:
E. I. du Pont de Nemours Price range 1965: $225-1/4--$261
Shares Date Reported
Christiana Securities 13,416,120 February, 1965
Crawford H. Greenewalt 11,710
Co-trustee 4,000
L. du Pont Copeland 69,297 November, 1963
Andelot, Inc. 40,668
Trust 86,072
Irenée du Pont, Jr., 7,562 August, 1963
Trusts 20,000
Pierre S. du Pont 2,926 March, 1963
William du Pont, Jr., 8,000 February, 1963
Trusts 1,261,888
Irenée du Pont, Jr., Trust 143,864 September, 1962
Henry B. du Pont 12,407 September, 1961
Emile F. du Pont 8,766 March, 1961
These are by no means the only transaction dates for Du Ponts in stock of Christiana Securities and E. I. du Pont de Nemours in the early 1960's. They merely represent some of the latest positions.
A more thorough disclosure of the identities of some leading Du Pont stockholders was made in the Monthly Summary for June 11, 1949, on the occasion of a stock split in E. I. du Pont de Nemours. Then the holdings of Du Ponts who were officers and directors and holders of more than 10 per cent were as follows:
Common Shares
Donaldson Brown, married to
Greta du Pont Barksdale
Broseco Corp. (Brown Securities Corporation) 20,000
J. Thompson Brown 49,096
W. S. Carpenter, Jr 47,256
Christiana Securities 12,199,200
Lammot Copeland 110,680
Trust 92,572
Delaware Realty & Investment 1,217,920
Emile F. du Pont 2,248
Wife 180
Eugene du Pont 203,212
Henry B. du Pont 10,844
Henry F. du Pont 173,000
Irenée du Pont 12,000
Lammot du Pont 63,836
P. S. du Pont III 6,940
Pierre S. du Pont 32,896
C. H. Greenewalt 4,236
$4.50 series preferred
shares
Lammot Copeland through
Delaware Realty 16,256
Emile F. du Pont 15
Eugene du Pont 6,405
Henry B. du Pont through
Delaware Realty 16,256
Henry F. du Pont 14,184
P. S. du Pont III 11
Pierre S. du Pont 34
Trust 1,611
The way titles stood at the end of 1965 was as follows: Members of the Du Pont family own more than 75 per cent of Christiana Securities, which in turn owns at least 29 per cent of the stock of E. I. du Pont de Nemours. Individual Du Ponts separately own additional E. I. du Pont stock or are beneficiaries of trust funds, so that the entire family holding exceeds 44 per cent in gigantic E. I. du Pont de Nemours.
E. I. du Pont de Nemours itself, until recently, owned 23 per cent of the stock of General Motors Corporation, saleswise the world's largest industrial company. After it and other Du Pont holding companies and trust funds were ordered by a federal court to distribute this stock to individual equity owners, each owner of each share of E. I. du Pont de Nemours received 1.36 shares of General Motors. Upon receiving their share of the GM distribution, Christiana Securities and other Du Pont family funds (selling some to pay capital gains taxes.) passed the GM shares they received on to individual Du Ponts.
The question now is: How much General Motors stock remains in the hands of individual Du Ponts? Assuming that they sold none since the court order took effect in 1962, on the face of it they still hold at least 17.25 per cent of General Motors outstanding stock. This minimal figure is arrived at by assuming the payment of a 25 per cent capital gains tax on the entire holding in GM, an overgenerous assumption because the holding was not all interpreted as capital gains.
However, the Du Pont company management announced that, going beyond the court order, members of the family closely associated with the Du Pont company management would voluntarily dispose of their General Motors stock, but such sale would hardly bring holdings below 17.25 per cent because no tax at all was required on the GM shares distributed to individuals by E. I. du Pont de Nemours.
The SEC reports do not show holdings for Du Ponts in other companies where they are not officers, do not own more than 10 per cent individually, or have not engaged in stock transactions. But that they are interested personally in other companies is shown by the September, 1965, Official Summary where Henry B. du Pont is reported holding 6,000 shares in Remington Arms after selling 500 shares. E. I. du Pont de Nemours owns 60 per cent of Remington common and 99.6 per cent of the preferred. Transactions were not traced for this study in companies like U.S. Rubber and Phillips Petroleum, where Du Pont interests are represented on the boards of directors.
But in Remington Arms another big old-line family holding was shown in the December, 1961, report for M. Hartley Dodge, son of the founder, who was reported as retaining 510,787 shares after selling 9,072 shares to other members of his family. Mr. Dodge, son-in-law of William Rockefeller, held 50,000 additional Remington Arms shares through a holding company and 28,407 shares in a trust fund. (The SEC reports provide similar information on the other old-line wealthy families: Phipps, Clark, Danforth, Knudsen, Baker, Anderson-Clayton, Dollar, Fisher, Heinz, Swift, Prince, Pew, Harriman, Block, Ryerson, Pitcairn, Hanna, Levis, Warburg, Kresge, Timken, Armour, Grace, Bedford, Firestone, Rosenwald, Colgate, Peet, Milbank, Crocker, Jennings, Olmsted, Cudahy, Havemever, Cabot, Lehman, Woolworth, Gimbel, Jones-Laughlin, Candler, Rosengarten, Hochschild, Wrigley, Rosenstiel, Reynolds, and others.)
With very few exceptions, and a few additions, the roll that was called in the formidable TNEC study is echoed and reechoed today in the SEC monthly reports.
What has been proved in these foregoing pages? Not very much, one would be forced to agree: Merely that the Du Ponts are still alive and thriving and are richer and more powerful today than they were in 1940. And one can predict that they will continue to grow richer and more powerful as long as the continually amended New Deal, Square Deal, New Frontier and Great Society politico-economic synthesis prevails.
The Ford Family
There isn't much doubt about the financial endurance of the Ford family, because the holdings of Henry and Edsel Ford were transferred only after 1947 to the present heirs. Those who believe they may be suffering extinction under the impact of metaphorically brutal taxes or other forces may gain reassurance from recent records.
The Fords did not turn up in the SEC reports until September, 1956, when it was shown that Benson Ford held 1,025,915 shares of Ford Motor Class B stock and Henry Ford II held 1,055,346 of the Class B. The Class B stock, all of which went to the Fords, holds 40 per cent of the voting power. The way this Class B holding came to the SEC record was explained as follows: "Reported that by the terms of a trust created by a relative, Benson Ford and Henry Ford II had in common with two others an option expiring 6/26/56 to acquire 15000 shares of Class B stock. Benson Ford, on 6/20/56, by gift, delivered an assignment of his portion (3750 shares) of the option. On 6/26/56 Henry Ford II, for a consideration, delivered an assignment of his portion (3750 shares) of the option."
In the February, 1957, Official Summary it was reported that Henry Ford II disposed of 9,000 shares of Class B and in September, 1957, it was shown that he disposed of 100,000 shares and acquired 100,000 shares of the common. The March, 1959, report showed him disposing of 19,415 Class B shares in a private sale and that he had established a holding company that owned 3,284 shares; he retained 815,901 Class B shares at this point. By September, 1959, he had reduced his common holdings to 90,500 shares.
As of September, 1964, Henry Ford II no longer held any common in his own name but did hold 43,846 shares through a trust.
In March, 1964, it was reported that he now owned 1,319,576 Class B shares, held 75,000 B shares in trust, 12,000 B shares through holding companies and was trustee for 316,398 B shares. He now held 99,846 common -shares in a trust.
In January, 1962, it was reported that Benson Ford had reduced his direct holdings of the Class B to 894,147 shares but indirectly held 5,987 in holding companies and 105,456 in trust.
These are the latest positions through 1965 shown for the two men. No positions are shown for William or Charlotte Ford, which presumably were originally identical.
As reported earlier in this account, the Ford family effectively controls the Ford Motor Company and would continue to control it even if a considerable amount of additional common stock were given voting power through sale by the Ford Foundation.
The Mellon Family
The SEC report of March, 1965, showed Richard King Mellon clearing out his last 100 shares of Aluminum Company of America $3.75 cumulative preferred stock, leaving his holdings in this issue at zero. In July, 1963, however, he was shown as holding 861,200 common shares of Alcoa ($61-1/2-$79-5/8) ) after disposing of 291,552 shares. Alcoa is the world's largest aluminum producer. And in June, 1963, he retained 2,809,922 shares of Gulf Oil ($87-$94-1/4) ) after disposing of 1,943,580. But in July, 1961, he held 4,666,929 shares of Gulf after selling 400,000 shares.
On the basis of the above facts one might reasonably conclude that the Mellons were still flourishing, without taking into account their other manifestations in the form of directorships and the like.
But a more positive showing can be made. In December, 1945, according to SEC reports, some years before six-for-one stock splits, Richard King Mellon owned 1,070,637 shares of Gulf Oil, and his sister, Sarah Mellon Scaife (who died late in 1965) owned 1,041,144 shares. Donaldson Brown of General Motors and Du Pont intermarriage owned 100 shares of Gulf Oil in July, 1947, and held 93,400 through the Broseco Corporation. Alan M. Scaife owned 9,300 shares of Gulf Oil, according to the January 10, 1949, SEC report, and by January, 1950, had raised his holding to 10,300 shares. He owned 30,600 shares in June, 1951.
Down through the years various other transactions in Gulf Oil and Alcoa are shown for this branch of the Mellon family but there is no present point in tracing them; the Mellons are, obviously, still in the ascendant.
The SEC reports show no transactions since 1945 in Gulf Oil or Alcoa for Paul or Ailsa Mellon or transactions for either of these two Mellons in the securities of any companies since 1960. Paul Mellon has been less active than his older cousin in corporate affairs, has more particularly applied himself to foundation and cultural affairs.
The TNEC study found that this clan had a finger in some hundred companies. Even if one had records of recent transactions in them all it would be awkward to set them forth. Exposition is defeated by the very extent of holdings. Recent SEC reports show, for example, that the Consolidation Coal Company, formerly the Pittsburgh Coal Company, of which Richard, Paul, Sarah and Ailsa Mellon owned more than 50 per cent (according to the TNEC study), now holds a 7 per cent interest in the Chrysler Corporation. To trace all such ramifications would be a virtually endless task.
Nor can we undertake to scrutinize all overlappings of large interests. The M. A. Hanna Company is a very large stockholder in Consolidation Coal, the SEC reports, and has heavy investments in many other large companies. H. Barksdale Brown, of the Du Pont clan, owns 3,317 shares of Gulf Oil (SEC, May, 1965); and the Broseco Corporation, instrument of the Brown family, held 666,684 shares on that date. We have already seen that Donaldson Brown, former high General Motors executive, and the Broseco Corporation are heavy stockholders in E. I. du Pont de Nemours. Donaldson Brown and the Broseco Corporation are also substantial stockholders in General Motors (SEC, October, 1950). Down through the years there has been much talk, much of it uninformed, about interlocking directorships. It is more significant that there is a great deal of interlocking ownership among the big interests.
The Pew Family
The TNEC study found the Pew family of Philadelphia in firm ownershipcontrol of the huge Sun Oil Company ($56-5/8-$67-3/4). Recent SEC reports confirm that the family is still in charge with a large dominant interest, 41.5 per cent. John G. Pew recently held 44,139 shares (September, 1965). Arthur E. Pew, Jr., held 37,170 shares and a John G. Pew trust 217 shares (December, 1964). Walter C. Pew held 434,214 shares (November, 1964). J. Howard Pew held 794,416 shares (April, 1964). A trust for A. E. Pew, Jr., held 32,207 shares (November, 1963). J. N. Pew, Jr., held 647,335 shares (November, 1960). And so on. Whatever the precise Pew ownership position is at any given time, one is obliged to conclude that the Pews are still in full charge of the Sun Oil Company.
The Pitcairn Family
This Pennsylvania family, shown by the TNEC study to dominate the giant Pittsburgh Plate Glass Company ($67-1/4-$85), in the SEC report for August, 1965, was shown to still hold 3,121,296 shares (about 30 per cent) through the Pitcairn Company, the family holding company. Nathan Pitcairn, according to SEC reports (August, 1963) owned 2,912 shares of the Pittston Company ($23-1/8-$32-3/8), big coal, oil and transportation holding company; and the Pitcairn Company held 42,000 shares of Pittston, Whatever else they own the available record showeth not.
The Rockefeller Family
The SEC reports fail to show any dealings in any of the Standard Oil Company stocks by the six leading Rockefellers since 1940. This lacuna is perhaps to be expected, as none of them is a director in the Standard Oil cluster and apparently none individually owns as much as 10 per cent of any Standard Oil stock. As far as the SEC reports show, the Rockefeller position in the Standard Oil group has remained basically unchanged since the time of the TNEC study, although there could have been sales or purchases without their being reflected in the SEC reports. There were indeed sales of Socony in the early 1950's by the late John D. Rockefeller, Jr.
The SEC report for July 10, 1947, showed the Rockefeller Foundation holding 345,902 shares of Standard Oil of Ohio after selling 6,782 shares. Various SEC reports show recent holdings for old-line Standard Oil families such as the Jennings and Bedfords.
But a few dealings in stocks of non-Standard Oil companies of which they are directors are shown in the reports for David and Laurance Rockefeller, suggesting that they still command ample resources. Whether they have sold out any Standard Oil holdings in order to participate in other companies the record does not show, but there is no reason to suppose they have. Apart from their foundation trusteeships the Rockefeller brothers, with the exception of New York Governor Nelson A. Rockefeller, are currently all directors of Rockefeller Center, Inc., and Rockefeller Brothers, Inc.
David Rockefeller is chairman of the Chase Manhattan Bank, second largest in the country, and is known to hold stock in companies in which he holds directorships. The SEC, November, 1962, showed that he held 8,950 shares of B. F. Goodrich stock through trusts. As of 1965 he was a director of Goodrich, Rockefeller Brothers, Inc., Equitable Life Assurance Society; and chairman of Morningside Heights, Inc., a real estate development.
Laurance S. Rockefeller is often described as a "venture capitalist" and, in addition to his foundation trusteeships, was in 1965 chairman of Rockefeller Brothers, Inc., Cancel Bay Plantation, Inc., Rockefeller Center, Inc.; director of Filatures et Tissages Africains; chairman of Estate Good Hope and of the Dorado Beach Hotel Corporation. The SEC reports, September, 1961, show that he held 183,274 shares, more than 15 per cent, of the Marquardt Corporation ($8-3/4-$19-1/2 ) after selling 1,300 shares. In Itek Corporation he sold 425 shares as reported by SEC in July, 1965, retaining 152,080 shares ($41). His investment orientation is said to be toward growth enterprises.
Winthrop Rockefeller, a self-described investment manager, has established himself in Arkansas as an extensive operator in land and large-scale agricultural projects. He is a director of the Union National Bank of Little Rock. The most martial of the Rockefellers, he entered the army as a private in 1941 and emerged as a lieutenant colonel; he was with the 77th infantry in the invasion of Guam, Leyte and Okinawa and was decorated with the Bronze Star with oak leaf cluster and the Purple Heart.
If one were to base one's conclusions about the financial status of the Rockefellers from the SEC reports alone, there would be little to tell. A stranger to the scene, with only the SEC reports to go on, would never conclude the Rockefellers amounted to much financially. But we do know from court records that the extensive Standard Oil holdings of John D. I passed to his children, chiefly to John D. II, whose will in turn indicated that he had established trust funds for his six children and many grandchildren. We are thrown back in this case to the TNEC study for basic data.
The family could have divested itself of Standard Oil holdings but, if it had, the fact would have become known through SEC reports or other channels The Rockefellers do not actively associate themselves with the management of the Standard Oil enterprises, apparently allowing them to be run according to standard big-business practices; but the general opinion of investment specialists is that directly and indirectly they hold a decisive veto power over any policy or action of these companies. No conceivable financial syndicate in the world would undertake to challenge the unobtrusive Rockefeller dominance of Standard Oil Company (New Jersey), the largest oil company and the largest industrial enterprise by assets of any kind in the world.
My conclusion is that the relative financial position of the Rockefeller family is now the same as or better than it was at the time of the TNEC study. It may be surpassed a bit by the far more numerous Du Ponts; but no single Du Pont appears to be as wealthy as any one of the six oldest Rockefellers. The financial strength of the Du Ponts is spread unevenly among some 250 persons. So, while the collective net worth of the Du Ponts may or may not be somewhat greater than that of the Rockefellers, only the Mellons can compare with the latter individually.
The general strength of the Rockefellers and Mellons, net worth to one side, also appears notably great because it is more widely diversified in high priority enterprises--especially banking. The Du Ponts seem more deeply entrenched in frontier technology, although neither the Standard Oil companies nor Gulf Oil should be overlooked as huge science-oriented enterprises. They are more than producers and distributors of petroleum.
But the very vagueness of our recent specific data on the Rockefellers, their failure to trade in and out of their stocks, should in itself be taken as a sign that they preside over enterprises too vast to permit distraction into minor operations.
The Rosenwald Family
About 25 per cent of the stock of Sears, Roebuck and Company, largest merchandising enterprise in the world, is owned by the employees' pension fund. The TNEC report showed the Rosenwald family holding 12.5 per cent Of the stock, worth now about $500 million. While the Rosenwalds do not engage. in many stock transactions in this company, there have been a few, enough to signal that they are still present. Whether their percentage holding is now greater or less than it was there is no way of determining through the SEC reports. In view of the vast expansion of the company since the war, one would surmise that they had simultaneously added, net, to their holdings The most recent Rosenwald holding was shown in the SEC report for October, 1964, when Edgar B. (Rosenwald) Stern, Jr., was shown as owning 25,017 shares directly, 1,762 shares as community property and 312,844 shares through a trust fund. He is a director of the company and an occasional trader in the stock. The July 11, 1949, SEC report showed that Julius Rosenwald II held 7,248 shares after selling 750 shares. As neither of these are the major living Rosenwalds, who are Lessing and William, we may safely conclude that the family still maintains a large financial presence in the company, with the management of which they have always been actively associated.
Miscellaneous Large Holdings
Similar large holdings by family and investment groups in major companies can be set forth. In order to economize on space there will now be summarily reported, on the basis of the SEC reports, some concentrated large stockholdings in the largest companies of 1964, mostly of old-line families. The dates are of the SEC monthly reports. Prices are the 1965 range.
Some such holdings are, incompletely, as follows:
Shares Date
Armour ($35-1/4--$53-1/8)
Frederick Henry Prince Trust of 1932 356,000 Sept., 1965
Modestus R. Bauer 136,400 March, 1965
William Wood Prince 63,625 Jan., 1965
Reynolds Metals ($33-5/8--$48)
David P. Reynolds 175,090 Jan., 1965
Trusts 180,264
Minor daughters 4,7 20
Davreyn Corp.
R. S. Reynolds, Jr. 64,075
Trusts 252,256
As custodian 323
Rireyn Corp. 42,472
William G. Reynolds 108,486
Trusts 84,87 8
Wilreyn Corp. 240,5 77
Singer ($56--$83-1/)4
Stephen C. Clark, Jr, 113,432 Sept., 1965
Trusts 193,872
F. Ambrose Clark 259,264 Jan., 1964
Trusts 650,110
American Sugar ($19-3/8--$31-5/8)
Frederick E. Ossorio 51,325 Sept., 1965
Ossorio family 35,759
As custodian 21,896
Inland Steel ($41-3/8--$48)
L. B. Block 61,500 Aug., 1965
Trusts 123,900
Joseph L. Block 51,563 May, 1965
Trusts 123,900
Phillip D. Block, Jr 143,694 Feb., 1960
Trusts 19,500
Alleghany ($8-3/4--$13-3/4)
Allan P. Kirby (Woolworth) 3,451,913 Dec., 1963
Holding company A 632,900
Holding company B 9,400
Scott Paper ($33-$40-1/8)
Thomas B. McCabe 865,752 Nov., 1963
Minnesota Mining & Mfg. ($540-$71-5/8)
Ralph H. Dwan 1,000 Aug., 1965
Trust 876,000
Trust 371,800
John D. Ordway 4,500 Aug., 1964
Foundation 1,500
Ordway Trust 4,682,504
William L. McKnight 2,711,801 May, 1963
Archibald G. Bush 1,797,895 May, 1961
General Guarantee Insurance 25,000
Owens-Illinois ($49-5/8--67-1/4)
Robert H. Levis II 12,980 July, 1965
R. G. Levis Estate 4,200
Trust 60,000
J. Preston Levis 25,450 Aug., 1964
Trust 2,000
William E. Levis 53,592 July, 1960
Partnership 8,000
Polaroid ($44-1/4--$130)
Edwin H. Land 1,313,520 July, 1965
James P. Warburg
Holding company 36,885
Bydale Company 169,7176
Fontenoy Corporation 1,216
(Both of these holdings are
reduced from originals)
International Business Machines ($404-$549)
Arthur K. Watson 56,111 May, 1965
Trusts 34,315
Thomas J. Watson, Jr. 37,072
Trusts 34,315
Sherman M. Fairchild 164,795
Magellan Company 3,750
Dow Chemical ($65-1/8--$ 83-3/4)
Herbert H. Dow 272,832 March, 1965
Corning Glass Works ($49-1/8--$58-3/4)
Amory Houghton 51,350 Feb., 1963
Trusts 918,651
Amory Houghton, Jr 400 Oct., 1961
Trusts 22,500
As Trustee 1,130
Arthur A. Houghton, Jr. 265,465
Trusts 990,401
International Paper ($281/4--$36-1/8)
Ogden Phipps 1,513 March, 1965
Trust 14,599
Holding company 909,226
W. R. Grace ($47-1/4--$61-3/8)
J. Peter Grace 240,678 March, 1965
Trusts 50,715
Michael Phipps 8,641 Dec., 1963
Holding company No. 1 370,897
Holding company No. 2 9,146
John H. Phipps 10,028 July, 1962
Trust 752
Holding companies 372,590
Weyerhaeuser ($41-1/2--$49-3/8)
C. D. Weyerhaeuser 117,069 Feb., 1965
Trust 165,963
Corporation 1,422
John H. Hauberg 15,658 Dec., 1964
As guardian 7,050
Trusts 170,732
Corporations 13,500
Nonprofit corporation 2,125
Herbert M. Kieckbefer 298,278
John M. Musser 76,356 April, 1964
Trusts 162,800
As trustee 110,257
F. K. Weyerhaeuser 142,646 Jan., 1964
Trusts for children 64,000
Green Valley Co. 35,360
Winn-Dixie Stores ($35-1/8--$43-7/8)
Four members of Davis family 2,714,897 Feb., 1965
Anderson, Clayton ($26-1/8--$33-1/2)
S. M. McAshan, Jr. 55,326 Jan., 1965
S. C. McAshan Trust 129,838
William L. Clayton 111,652 Oct., 1964
Leland Anderson 31,103 Dec., 1962
Hunt Foods & Industries ($24-3/4--$33-7/8)
Donald E. Simon 236,921 Jan., 1965
Trusts for children 3,422
Frederick R. Weisman 11,025 Nov., 1964
Lerand 80,293
Robert Ellis Simon 260,649 Aug., 1964
Georgia-Pacific ($51-5/8--$65-5/8)
Julian N. Cheatham 61,086 Dec., 1964
J. N. Cheatham Corp. 21,173
Owen R. Cheatham 217,189
R. B. Pamplin 22,329
R. B. Pamplin Corp. 22,943
Trusts 31,300
Robert E. Floweree, Jr. 37,644 March, 1965
H. J. Heinz ($33-5/8--$49-3/8)
H. J. Heinz II 405,839 Sept., 1963
C. Z. Heinz Trust 577,728
Distillers Corporation--Seagrams ($30-3/8--$39-1/8)
S. Bronfman Trusts 3,382,026 Aug., 1963
Rohm & Haas ($151-1/2--$181-1/2)
F. Otto Haas 13,936 Jan., 1965
Trustee 23,707
John C. Haas 20,446
As trustee 23,708
Trusts 638,702
Charitable trusts 644,767
(Also see Feb., 1963, for
larger holdings)
William Wrigley, Jr. ($92-1/4--$104-3/4)
Philip K. Wrigley 364,256 Dec., 1964
Trusts 60,845
Corporation 15,000
Firestone Tire & Rubber ($40-7/8--$50-1/4)
Roger S. Firestone 267,452 Nov., 1964
H. S. Firestone, Jr. SPLIT 6 FOR 1 27,346 April, 1947
Raymond C. Firestone SPLIT 6 FOR 1 35,914
Roger S. Firestone SPLIT 6 FOR 1 28,390
Upjohn ($52-1/4--$77)
Dorothy U. Dalton 465,299 June, 1964
Rudolph A. Light 247,587
Trusts 72,331
Preston S. Parish 16,083 April, 1964
Trusts 242,152
E. Gifford Upjohn 44,617
Trusts 50,649
Donald S. Gilmore 188,750 Jan., 1964
Trusts 211,065
Consolidation Coal ($46-3/8--$66-3/8)
M. A. Hanna Co. 2,010,000 April, 1964
National Steel ($51--$65-3/4)
M. A. Hanna Co. 3,402, 780 April, 1964
Columbia Broadcasting ($33-5/8--$47-7/8)
William S. Paley 1,391,968 March, 1964
Holding company 297,430
As trustee 9,178
Olin Mathieson Chemical ($41--$58-1/4)
Spencer T. Olin 28,984 Feb., 1964
In voting trust 380,930
Ralston Purina $34-7/8--$41-1/2)
Donald Danforth, Jr. 40,304 Jan., 1964
As custodian 61,346
Crown-Zellerbach ($47--$60-1/4)
J. D. Zellerbach 104,462 July, 1963
Texas Eastern Transmission ($44-1/2--$53-3/4)
George R. Brown (Brown & Root) 0 June, 1963
Partnership 747,066
Foundation 16,850
Trusts 16,528
Brown Engineering 19,232
John F. Lynch 249,566 Jan., 1963
Fairchild Camera ($27-1/4-$165-1/4)
Sherman M. Fairchild 457,396 Feb., 1963
Partnership 35,000
Holding Company 22,000
Smith Kline & French Laboratories ($70-1/4--$86-3/4)
Miles Valentine 856 Dec., 1962
Trust A 42,570
Trust B 2,116,000
Allied Chemical ($46-1/8--$58-1/4)
William A. Burden 94,485 Sept., 1962
Trust 80,661
Company 136,135
Merck ($48-1/2--$75)
Adolph G. Rosengarten, Jr. SPLIT 3 FOR 1 33,110 Sept., 1961
Estate A SPLIT 3 FOR 1 60,600
Estate B SPLIT 3 FOR 1 43,000
Sehenley Industries ($22-1/4-$39-7/8)
Lewis S. Rosenstiel 636,958 Sept., 1961
Wholly owned company 66,183
Trust A 1,500
Trust B 217,859
American Metal Climax ($40-3/4--$54-1/4)
Harold Hochschild 510,558 Aug., 1961
Concentrated Control in All Companies
Having shown the persistence into the present of these very large interests, it will now be demonstrated that virtually all companies--large, medium and small--are ultimately controlled and/or mainly owned by a few large interests manifested mainly as families.
One could show this by direct citation of the SEC reports, which would necessitate literally thousands of references. But these SEC reports are utilized by investment analysis services in reporting to their pecuniary-minded readers. These services summarize the SEC reports of large holdings. We may therefore refer to a highly reliable secondary source which picks lip and summarizes these facts, a source available in major public and university libraries. It is The Value Line Investment Survey, published by Arnold Bernard and Company of New York. This Survey, devoted to analyzing investment properties, keeps a large number of well-known listed companies under a thirteen-week cyclical survey each year. The facts about to be listed were taken from the summaries of this Survey, which were compiled from the SEC monthly Official Summary.
The contention to which we are addressing ourselves, once again, is this: American companies are widely owned by at least twenty million stockholders, a number that is increasing. While this is true, because anyone owning a single share of stock worth $5 is a stockholder, we have already seen that most people do not own any stock at all. The thesis that stock ownership is widespread and the further thesis that most stock owners hold a great deal of stock is false. Only a very few people own stock in significant quantities. Just how few is shown by the cited University of Michigan studies.
In certain companies, it is true, stock ownership is widespread compared with most companies, and much of the stock is held in small quantities. But the fact that a person holds a small quantity of stock in a company like AT&T--100 to 500 shares--does not prove he is a small stockholder. He may and often does hold stock in many companies.
Although a company like AT&T does indeed have many small stockholders--persons owning 50 to 100 shares and perhaps little or no other stock--the carefully nurtured propaganda even about AT&T is grossly misleading. This propaganda asserts that no individual owns as much as 1 per cent of the stock of AT&T.
Now, if any person owned only 1/2 of 1 per cent of the stock in AT&T he would be enormously wealthy, worth about $160 million, but AT&T has large stockholders whose exact percentage of holdings today would be disclosed only by a government investigation addressing itself to this question. The United Kingdom government, for example, was until recently a very large stockholder in AT&T as well as in other American and European companies. European governments are large stockholders in many American and European companies. Additionally, private investment holding companies and family trust funds are large holders. The stockholdings interest even in AT&T, then, is not so completely generalized as one might conclude upon being informed that no individual owns as much as 1 per cent of its stock.
But if only ten individuals held 1/2 of 1 per cent each, that would be 5 per cent of the stock, worth about $1.6 billion, and a long step toward working control.
In presenting the following list of dominant interests in a wide variety of companies it should be noticed that the big stockholders are usually characterized as a family or group of officers and directors. This is done to save space; anyone can look up officers and directors in standard reference manuals if he is interested in identities. Scores of companies reported in The Value Line Investment Survey are not listed. In general, those are not listed in which no large interest is reported.
But just because large interests do not trade in a stock and because directors own only a few shares there is no reason to believe that large interests are not in the immediate background. In the General Electric Company, world's largest manufacturer of electrical appliances, directors own only 1 per cent of the stock and the SEC reports do not show any single stockholder or family group holding more than 10 per cent of the stock. Nevertheless, stockholdings in General Electric are quite concentrated.
The TNEC study, for example, as of November 24, 1939, showed that 86.2 per cent of the stockholders, owning 19.4 per cent of the stock, held fewer than 100 shares each. But 13.8 per cent of the stockholders, owning 80.6 per cent of the stock, held in blocks of more than 100 shares each. 3
Actually, out of 209,732 stockholders at the time, 522, or .2 per cent of all stockholders, held 33 per cent of outstanding General Electric stock, while 1.5 per cent of all stockholders held 53 per cent of the stock. 4 At that time in E. I. du Pont de Nemours, known by current SEC data to be still closely held by the du Pont family, 0.4 per cent of stockholders held 65.7 per cent of all stock. 5 There is not much difference, then, between a company closely owned and one supposed to be widely owned.
At that same prewar period the TNEC study showed that in AT&T, 0.02 per cent of stockholders held 7.8 per cent of the stock, 0.1 per cent of the stockholders held 15.3 per cent of stock and 0.4 per cent of the stockholders held 21.2 per cent of the stock (these figures being cumulative). 6
In a large company only 5 per cent of the stock, particularly if it is voted by the management, is generally considered to be a long step toward working control, and 15 per cent is said to be well-grounded working control. Only a powerful syndicate contending for the support of medium and small stockholders can hope to challenge the control of a 15-per-cent block in a big company. Naturally, the closer the controlling block approaches 51 per cent of the stock the nearer it is to absolute control. But working control is ordinarily sufficient for running the company and determining its policies.
AT&T in 1965 had 2,674,000 stockholders. If we assume there is now the same distribution of large stockholders its before World War II, then 534 stockholders now vote 7.8 per cent of the stock, 2,674 vote 15.3 per cent and 10,679 vote 21.2 per cent of the stock. Thus is refuted the contention that in this most widely owned of American companies there is no power-center of concentrated ownership. And if these percentages do not now actually prevail, some closely similar set of percentages surely holds and it may well be that relatively fewer stock-holders own larger percentages of the stock now than in 1939.
The management of AT&T, far from representing a generalized wide interest in its stock, in fact acts at the behest of a small group of large stockholders and trust fund managers. The directors themselves hold less than 0.1 per cent of the stock.
By consulting this same TNEC source anyone can ascertain that in every large American company, no matter bow many individual stockholders it may have, extremely large blocks are held by a handful of people. Indeed, the same statistical presentation of TNEC showed some large companies to be 100 per cent owned by a single shareholding: Great Atlantic and Pacific Tea Company, Ford Motor Company and Hearst Consolidated Publications. In the 1930's it was quite common for big public utility operating companies to be 100 per cent owned by a holding company and for entire issues of preferred stock to be owned by a single stockholder.
The TNEC study showed, in fact, that almost always only a fraction of 1 per cent of the stockholders (usually only a small fraction) in all the large companies own huge controlling blocks of stock. 7 Numerous small stockholders collectively usually own only a minor percentage of outstanding stock.
Let me here cite the TNEC percentages for a few companies commonly regarded as widely held. American Can, .2 per cent of stockholders owned 29.9 per cent, .8 per cent owned 45.2 per cent; Coca-Cola, .7 per cent owned 66.1 per cent; Corn Products, .4 per cent owned 37.3 per cent; Consolidated Edison, .2 per cent owned 30.8 per cent; Eastman Kodak, .1 per cent owned 16 per cent; General Motors, .6 per cent owned 65.5 per cent; Sears, Roebuck, .2 per cent owned 44.9 per cent; Texas Corporation, .3 per cent owned 31.8 per cent, etc. The pattern rarely varies. And when it does it gives no support to those who argue that stock is widely held. Thus, in Anderson, Clayton & Co., then and now the largest cotton merchandisers in the world, 10 per cent of stockholders held 73.6 per cent of common stock; and 26.7 per cent held 95.8 per cent. But the 10 per cent consisted of three shareholdings and the 26.7 per cent of eight shareholdings., for this was a company with very few stockholders.
The fact that all companies are not cited in what follows, therefore, does not indicate that there are companies without very small groups of large stockholders, All it indicates is that there has been no recent citation of such evidence for some companies in the SEC reports.
This can flatly be. said as a fact: There is no American producing company that is controlled through a representative directorship by or primarily on behalf of a set of stockholders each of which owns or has a beneficial interest in. only an infinitesimal proportion of outstanding shares. "People's capitalism" has this in common with "people's democracy": The rank and file doesn't have much to say, which is what common sense alone would lead one to suppose.
The method of disproving this sweeping statement (what logicians call a universal statement) is extremely easy. All anyone has to do is to point to the exceptional company and the statement is falsified. The company usually pointed to as the exceptional case, AT&T, is clearly not such a case; nor is General Electric. There is no company on the TNEC list, analyzed with a view to disclosing such data, that meets the requirement.
Bearing all this in mind, let us now look at the broad evidence of large interests that has been revealed in recent SEC reports. The dates heading each section of companies are the dates of the separate weekly issues of The Value Line Investment Survey.
The additional companies with recently revealed large controlling owning individuals or groups of stockholders are as follows (instances repeating our findings from the SEC reports have been retained):
October 1, 1965
Allied Supermarkets Officers control about 50 percent of shares
Broadway-Hale Stores Hale Bros. Associates owns 20 per cent of
stock
City Stores Bankers Securities Corp. owns about 75 per
cent; G. A. Amsterdam, Chairman, and
associates own majority control of Bankers
Securities
Emporium Capwell Broadway-Hale Stores, Inc., owns 23.9 per
Cent
Gimbel Brothers Directors and associates interested in about
15 per cent of shares
W. T. Grant W. T. Grant owns 14 per cent common
stock; Grant Foundation, 12 per cent
S. Klein Dept. Stores McCrory Corp. owns 18.6 per cent of out-
standing stock
E. J. Korvette F. Ferkauf and family own 28 per cent of
Stock
Sears, Roebuck Employee pension fund owns 24 per cent
(Rosenwald family owns at least 12.5 per
cent by TNEC study and scattered SEC
reports.)
Bond Stores Directors interested in 14.1 per cent
Diana Stores Directors vote 26.2 per cent of outstand-
ing stock
Lane Brvant Directors vote 28 per cent
S. S. Kresge Directors vote about 3 per cent of stock;
Kresge Foundation, 21.6 per cent
McCrory Rapid-American Corporation owns 50.5
per cent of common
Neisner Brothers 51 per cent of stock controlled by Neisner
Family
J. J. Newberry Newberry family controls about 40 per
cent common
Peoples Drug Stores Trusts of the Gibbs family control about
13 per cent of stock
Colonial Stores National Food Products Corp. holds 33 per
cent common; directors own about 17 per
cent Colonial common, 21 per cent Na-
tional Food
Food Fair Stores Friedland family controls about 35 per
cent common
Food Giant Markets Management controls about 35 per cent
common and 51 per cent preferred stock
Food Mart Management controls about 10 per cent of
Shares
Grand Union L. A. Green, director, and relatives own
9.0 per cent common and 10.9 per cent
convertible debentures
Great Atlantic & Pacific Hartford Foundation and members of fam-
Tea Co. ily own 72 per cent of stock
National Tea Company controlled by W. Garfield Weston
Penn Fruit Directors own about 35-40 per cent common
Von's Grocery Von Der Ahe family owns 43.6 per cent of
stock; Hayden family owns 19.5 per cent
Winn-Dixie Stores Davis family of Florida owns 28 per cent
common
Beaunit Corp. El Paso Natural Gas owns 32 per cent
National Sugar Refining H. Havernever, Jr., and H. W. Havemeyer
and their associates own 28 per cent
North American Sugar Kaiser family owns 25 per cent
American Crystal Sugar North American Sugar holds 9 per cent
Sucrest Corp. Taussig family controls about 42 per cent
October 8, 1965
Columbia Broadcasting W. S. Paley and directors control about 15
per cent
Desilu Lucille Ball, actress, owns 50 per cent
common and Class B combined
Disney Productions Directors own or control about 41 per cent
MCA, Inc. Directors own 45 per cent common
Hilton Hotels Conrad Hilton and directors own 27 per
cent of stock
Howard Johnson About 38 per cent is owned by Johnson
Family
Sheraton Corporation Henderson and Moore families own 22 percent
October 15, 1965
Only banks and insurance companies, involving secondary holdings of assets, are listed in the issue of this date, and usually the dominant interests are not shown because there are few changes in key holdings from year to year.
The known dominant interest of the Mellons in the Mellon National Bank or of the Rockefellers in the Chase National Bank is therefore not alluded to. On the basis of either the SEC or TNEC reports there is no direct evidence of such interests, which are known on other grounds such as presence among directors. If a Mellon, Rockefeller, Du Pont or similar personage is on the board of directors of a bank, one has no reason to suppose that he is contributing his widely informed insight to a profit-making institution in which he has no beneficial stake.
In general, among banks and insurance companies there is an even smaller distribution of small holdings than in some of the well-known industrial companies because they are more apt to attract a rarer sophisticated type of investor with a better understanding of these relatively complicated media. Values in the shares of financial companies are leveraged by more subtle factors than are those of most industrial companies and often the true values are concealed. In general, in the mid-1960's, the values of most banks and insurance company stocks were understated in market price while the values of most industrial companies were grossly overstated. These discrepancies correct themselves in time. But a sophisticated investor, buying a stock at 50 which he knows to be worth 100 (and such situations can be pointed to), does not mind if the price does not immediately advance or even if it declines still further. He knows that eventually it must work out at its true value. Meanwhile, he can presumably afford to wait.
But in this issue of The Value Line Investment Survey it is pointed out that the Transamerica Corporation, an investment company, holds an 11 per cent interest in Crocker-Citizens National Bank of California. Transamerica was established by the Giannini interests, which built the Bank of America of California into the biggest commercial bank in the world.
October 22, 1965
Aerojet-General General Tire owns 84 per cent of voting
Stock
Beech Aircraft Mrs. O. A. Beech controls 17 per cent;
directors 4 per cent
Douglas Aircraft J. S. McDonnell controls 5 per cent
McDonnell Aircraft J. S. McDonnell, Jr., owns 14 per cent
common; other officers 5 per cent
Fairchild Hiller Sherman M. Fairchild and other directors
own ./control 7 per cent
General Dynamics Henry Crown controls almost all of 896.7
million preferred stock
Grumman Aircraft Engineering Directors control 8.5 per cent
Marquardt Corporation Laurance Rockefeller owns 16 per cent
Piper Aircraft W. T. Piper controls about 18 per cent
Chrysler Consolidation Coal (Hanna-Mellon) owns
7 per cent, directors 1 per cent
American Metal Products Directors own about 6.5 per cent
Champion Spark Plug Management owns about 66 per cent
Dana C. A. Dana owns 9.5 per cent common;
Dana Foundation 16.4 per cent
Eltra American Mfg. owns 33.4 per cent of stock
Fram S. B. Wilson and family control 11 per cent
Gulf & Western Industries Directors control about 20 per cent common
A. 0. Smith Smith family owns about 53 per cent of
Stock
Timken Roller Bearing Directors have 22 per cent
General Battery and Ceramic Officers/directors control about 26 per cent
Common
Globe-Union Sears, Roebuck owns 12 per cent
Gould-National Directors own about 24 per cent
Divco-Wayne Directors own 28 per cent
Deere Directors own 14.5 per cent
Armstrong Rubber Sears, Roebuck owns 9 per cent; directors
about 11 per cent
Firestone Tire & Rubber Firestone family owns about 21 per cent
of stock
General Tire & Rubber Directors control 17 per cent
October 29, 1965
Braniff Airways Greatamerica Corp. owns 58 per cent
KLM Royal Dutch Airlines Dutch government owns 51 per cent
National Airlines Directors own about 13 per cent
Northeast Airlines Storer Broadcasting owns 87 per cent
Trans World Airlines 77 per cent of stock held in trust for
Hughes Tool Co., owned by Howard Hughes
New York Central RR Allan P. Kirby controls; he owns 4.5 per
cent directly and controls 15 per cent
through Alleghany Corp.
Pittsburgh & Lake Erie RR 81 per cent owned by New York Central
Soo Line RR Canadian Pacific owns 56 per cent
Pittsburgh Forgings Directors own/control 12 per cent
American Commercial Lines 16 per cent closely held
American Export Isbrandtsen Isbrandtsen Co. owns 26.3 per cent common
Lykes Bros. Steamship Directors own 15 per cent; another 50 per
cent closely held by Lykes family interests
McLean Industries Directors own 60 per cent
Moore and McCormack Directors interested in 34 per cent
Cooper-Jarrett About 35 per cent of stock closely held
McLean Trucking About 20 per cent of stock closely held
Merchants Fast Motor Lines G. and C. L. Whitehead own 47.2 per cent
Roadway Express Galen J. Roush family owns about 52 per cent
Ryder System Directors control about 53 per cent
Spector Freight Directors own about 47 per cent
November 5, 1965
Amerada Petroleum United Kingdom government owns about
10.8 per cent
British American Oil 65 per cent owned by Gulf Oil (Mellon)
Creole Petroleum 95.4 per cent owned by Standard Oil (New
Jersey) (Rockefeller)
Hess Oil & Chemical Leon and Moses Hess interests control 66
per cent
Imperial Oil 70.2 per cent owned by Standard Oil
(New Jersey) (Rockefeller)
Kerr-McGee McGee interests control more than 11 per
cent of stock
Murphy Oil Management controls 56 per cent
Pacific Petroleums Phillips Petroleum (Du Pont presence)
owns 45 per cent
Richfield Oil Sinclair and Cities Service did own 61 per
cent (Atlantic Refining [Rockefeller] now
owns)
Shell Oil 69.4 per cent owned by Royal Dutch/Shell
Group
Signal Oil & Gas Officer-directors own majority of Class B
voting common
Superior Oil More than 50 per cent owned by Keck
Family
Coastal States Gas Producing Directors own about 19 per cent
Texas Gas Transmission Hillman family owns 11 per cent common
Transcontinental Gas Pipe Line Stone and Webster, Inc., owns 11 per cent
common; directors 2.6 per cent
Ayrshire Collieries B. F. Goodrich and associates own 43 per
cent common
Consolidation Coal M. A. Hanna controls with 15 per cent of
common stock; dominant Mellon presence
Eastern Gas & Fuel Associates 26 per cent closely held
Peabody Coal Directors own 16.3 per cent of voting stock
Pittston Directors control about 11 per cent com-
mon; Pitcairn family presence
United Electric Coal General Dynamics owns 53 per cent
November 12, 1965
Diamond Alkali Directors own 6.2 per cent common; Mel-
lon National Bank as fiduciary 12.7 per
cent
International Salt The Fuller family holds about 10 per cent
Koppers Directors control 10 per cent, but long
time Mellon interest
Minerals & Chemicals Philipp 50 per cent stock closely held
Minnesota Mining & Mfg. Directors own 19 per cent
National Starch & Chemical Mr. and Mrs. F. K. Greenwall own more
than 20 per cent
Occidental Petroleum Directors, including Armand Hammer and
Frederic Gimbel, own 14 per cent
Olin Mathieson Chemical Olin family and directors own 15 per cent
Pittsburgh Coke and Chemical Directors own or control about 57 per cent
Reichhold Chemicals H. H. Reichhold owns 14 per cent of common
Remington Arms E. I. du Pont de Nemours owns 60 per cent
common, 99.6 per cent preferred
Rohm & Haas 70 per cent of stock closely held (mainly
by Rohm and Haas families)
Stauffer Chemical 16 per cent of stock controlled by directors
Sun Chemical N. E. Alexander, president, owns about 20
per cent common
U.S. Borax & Chemical 73 per cent owned by Borax, Ltd.
Wallace & Tiernan Wallace, Tiernan and Strasenburgh fami-
lies own 54.5 per cent
Witco Chemical Directors control 56 per cent
American Hospital Supply Directors own 13.6 per cent
Baxter Laboratories Management controls 25 per cent common
Carter-Wallace CPT Development Corp., controlled by
Hoyt family, owns 51.9 per cent
Johnson & Johnson 42.4 per cent controlled by Johnson family
Kendall Directors own 20 per cent common
Eli Lilly Lilly Endowment, Lilly family and associ-
ates own 100 per cent of Class A voting
stock; only 25 per cent of Class B non-
voting stock publicly held
McKesson & Robbins Foremost Dairies owns 25 per cent
Mead Johnson Directors bold 49.6 per cent of voting stock
Miles Laboratories Management controls about 12.4 per cent
of outstanding stock
Plough, Inc. A. Plough, president, owns 13 per cent
Rexall Drug Directors own 12.3 per cent
W. H. Borer Borer family owns 36 per cent
G. D. Searle Searle family controls 46 per cent
Smith, Kline & French Directors control 32 per cent
Laboratories
Syntex Corp. Allen & Co., investment bankers, own 20
per cent; directors about 7 per cent
Upjohn Upjohn family owns 47 per cent
Warner-Lambert Pharmaceutical Directors own 12.2 per cent common
Anheuser-Busch Busch family and directors own about 24
per cent
Drewrys Directors interested in about 10.1 per cent
Falstaff Brewing Directors control about 13.3 per cent
Pabst Brewing "Management stockholdings are under-
stood to be large"
Joseph Schlitz Brewing Owned 93 per cent by Uihlein family
Brown Shoe Directors control about 8.5 per cent
Edison Bros. Stores Edison family owns 15 per cent
Genesco Officers and directors own 21 per cent
Common
Green Shoe Officers and families own about 26.5 per
Cent
International Shoe Directors own 9.5 per cent
U.S. Shoe Directors own about 15 per cent
Wolverine Shoe and Tanning Krause family controls 45 per cent
November 19, 1965
Duke Power Duke, Doris Duke Trust and Duke Endowment
control 73 per cent common stock
(Note: In most of the electric power and light companies directors usually
own 1 per cent or less of the stock and the large stockholders in recent
years do not trade; the large holdings, therefore, are not reflected in
recent SEC reports but must be sought in the original SEC prospectuses.)
November 26, 1965
American Cement Directors own about 25 per cent of stock
(Philip) Carey Mfg. Directors and families own about 10 per
cent
Congoleum-Nairn Power Corporation owns 26.3 per cent;
directors 7.5 per cent
Corning Glass Works Houghton family owns 33 per cent
Crane Directors own 18 per cent
De Soto Chemical Sears, Roebuck owns 52 per cent common
Kaiser Cement & Gypsum Kaiser family and directors own 24 per
cent common
Kaiser Industries Kaiser family owns about 50 per cent common
Marquette Cement Directors own 18.7 per cent common
Masonite Directors own 14.5 per cent
National Homes Officers and directors own 32.7 per cent
Owens-Corning Owens-Illinois Glass (Levis) and Corning
Glass (Houghton) each own 31.1 per cent
Common
Pittsburgh Plate Glass Pitcairn family owns 30 per cent stock
through The Pitcairn Co.
Screw and Bolt Directors control 26.4 per cent
Wallace-Murray About one-third of common and two
thirds of convertible preferred owned by
Charles H. Dyson and F. H. Kissner
Walworth General Waterworks owns 49.9 per cent
Welbilt Hirsch interests own 70 per cent common
Hudson Pulp and Paper Abraham Mazer Family Fund, Inc., controls
60.25 per cent common with management
interests
Riegel Paper Directors control about 10 per cent
American Distilling Directors own about 20 per cent
James B. Beam Distilling Directors control about 55 per cent
Brown-Forman Distillers Directors own about 25 per cent of Class
A, 20 per cent Class B
Distillers Bronfman family holds more than 38.8 per
Cent
Heublein Directors own 16 per cent of stock; addi-
tional 25 per cent held in trust for
insiders and families
National Distillers 12 per cent common owned by Panhandle
Eastern Pipe Line
Publicker Industries S. S. Neuman owns 25 per cent common,
controls additional 30 per cent
Schenley Industries Directors and associates own 30 per cent
common
December 3, 1965
Admiral Siragusa family owns about 40 per cent
Amp Directors own or represent about 33 per
Cent
Avnet Avnet family owns 25.8 per cent
Bunker-Ramo Martin Marietta owns about 62 per cent
Bundy Officers and directors own 35 per cent
Collins Radio Collins family owns 24.4 per cent
Consolidated Electronics U. S. Philips Trust owns directly and in-
Industries directly about 33 per cent common
CTS Directors own about 43 per cent
Emerson Electric Directors own 8 per cent
Emerson Radio Directors own more than 33 per cent
Fairchild Camera S. M. Fairchild of IBM owns 20 per cent
Cornell-Dubilier Electric 98 per cent owned by Federal Pacific Elec-
Tric
Pioneer Electric 100 per cent owned by Federal Pacific
Electric
Foxboro About 49 per cent is closely held
General Instrument Directors own about 20 per cent
General Precision Equipment Directors own about 10 per cent
Hoffman Electronics H. Leslie Hoffman and his family own
about 22 per cent
Indiana General Directors control about 7.9 per cent
International Resistance Directors control about 10 per cent
Magnavox Officers and directors own about 9 per cent
Maytag Directors own about 15 per cent
McGraw-Edison Officers and directors own 9.4 per cent
Motorola Galvin family controls 24 per cent; other
insiders own additional 12 per cent
Robertshaw Controls Reynolds Metals, largely owned by Reynolds
family, owns 30 per cent
Ronson Directors control more than 15 per cent
Sangamo Electric Bunn and Lamphier families control 25 per
Cent
Schick Electric Eversharp and Technicolor own 25 per cent
Schlumberger Schlumberger family controls about 50 per
Cent
Sunbeam Directors own about 13 per cent
Tung-Sol Electric Directors own or control about 22 per cent
of common
Varian Associates Directors and officers own about 17 per
cent of stock
Whirlpool RCA owns .5 per cent; Sears, Roebuck 7.5
per cent; directors 6 per cent
Zenith Radio Directors own 7 per cent
Carolina Telephone & Telegraph Bell System owns about 18 per cent
Comsat 50 per cent owned by the common carriers;
balance by general stockholders
New England Telephone AT&T owns about 69 per cent
Pacific Telephone AT&T owns about 90 per cent
Southern New England AT&T owns 18.4 per cent
Telephone
Central Telephone Western Power and Gas owns 57 per cent
Common
Addressograph-Multigraph Directors own about 15 per cent of stock
American Photocopy Rautbord family owns about 27 per cent
Control Data Directors own about 6 per cent
December 10, 1965
Cyclops Directors own about 6 per cent
Detroit Steel Directors control 13.7 per cent
Eastern Stainless Steel Officers and directors own about 8 per cent
Firth Sterling Directors own 11.7 per cent common
Harsco Directors have about 10 per cent of stock
Interlake Steel Pickands Mather & Co. own 9.2 per cent
common; directors 3.4 per cent
Kaiser Steel Kaiser Industries, owned by Kaiser family,
owns 79 per cent
Lukens Steel Huston family owns 38 per cent
National Steel M. A. Hanna Co. owns 22 per cent, in-
siders 3.5 per cent
Phoenix Steel Insiders own about 25 per cent common
Pittsburgh Steel Directors control about 21 per cent common
U.S. Pipe & Foundry Directors own about 2 per cent, Freeport
Sulphur 5.7 per cent
Wheeling Steel Hunt Foods & Industries own 11.1 per
cent; Cleveland Cliffs Iron 4.8 per cent;
directors 1 per cent
Woodward Iron Woodward family holds about 15.4 percent;
directors about 8 per cent common
American Metal Climax Selection Trust owns 12.2 per cent com
mon; directors 4.2 per cent; Phelps Dodge
4 per cent
American Zinc, Lead & Smelting Consolidated Goldfields of South Africa
owns 61 per cent
Bunker Hill Hecla Mining owns 9.75 per cent common
Campbell Red Lake Dome Mines, Ltd., owns 57 per cent
Cleveland-Cliffs Iron Directors own about 5 per cent; Detroit
Steel 22 per cent
Consolidated Mining Canadian Pacific owns 51.5 per cent
Copper Range American Metal Climax owns 17.5 per
cent; Blacton & Co. 12.5 per cent
Great Northern Iron In trust for lifetime of 18 persons
Harvey Aluminum Harvey family owns all Class B stock
Hudson Bay Mining Anglo-American Corporation owns 18 per
cent common
Inspiration Consol. Copper Anaconda Co. owns about 28 per cent of
Stock
Kaiser Aluminum Kaiser interests own 45.2 per cent common
Magma Copper Newmont Mining owns 80.6 per cent common
McIntyre-Porcupine Mines Shares closely held
Newmont Mining Directors own more than 15 per cent common
Reynolds Metals Directors, mainly members of Reynolds
family, control about 19 per cent
United Nuclear Olin Mathieson and Malinckrodt Chemical
Works own nearly 30 per cent
Vanadium Directors control about 11 per cent
Calumet & Hecla Directors control about 9 per cent common
Continental Copper Directors Control 7 per cent common
Fansteel Metallurgical Directors control 9 per cent of stock
General Cable American Smelting owns 36 per cent
Howmet Pechiney (France) owns 49 per cent com-
mon; directors control 8 per cent
International Silver Directors control 9 per cent common
Revere Copper & Brass American Smelting owns 34 per cent of
stock
December 17, 1965
American Chain & Cable W. T. Morris Foundation owns 17.8 per
cent of stock; directors 3.1 per cent
Baker Oil Tools Directors hold about 16 per cent common
Clark Equipment Directors and families own about 12 per
cent of stock
Continental Motors Ryan Aeronautical owns about 47 per
Cent
Foster Wheeler Directors own 5.7 per cent; Financial
General Corp. owns 13.5 per cent
Gardner-Denver Directors represent 7.1 per cent
Halliburton Co Directors own about 8 per cent
Ingersoll-Rand Directors own 6 per cent common
Leesona Directors own about 17 per cent
Link-Belt Directors own about 6 per cent
McNeil Directors own 11 per cent
Mesta Machine Directors own about 6 per cent common
Outboard Marine Ralph S. Evinrude owns/controls 14 per
cent of stock
Rockwell Manufacturing Rockwell family controls 19 per cent
Symington Wayne Directors own 10 per cent
Textron Directors own 6.5 per cent common
S. S. White Directors own about 6 per cent common
Brown & Sharpe Manufacturing Henry B. Sharpe, president, and family
own 34 per cent of stock
Carborundum Mellon family and related interests own
about 21 per cent common
Cincinnati Milling Machine Directors and families own 21.7 per cent
Common
Giddings & Lewis Directors and families own 21 per cent of
stock; Motch & Merryweather Machinery
10 per cent
Kearney & Trecker Trecker family owns about 50 per cent
Norton Officers and directors own 11 per cent
Common
UTD Directors interested in 25.3 per cent of
Stock
Dr. Pepper Directors hold about 11 per cent
Royal Crown Cola Directors hold 14.6 per cent; Pickett and
Hatcher Educational Fund 2.9 per cent
General Baking Goldfield Corp. owns 51 per cent common
United Biscuit Directors own 18 per cent of stock
Ward Foods Directors interested in 32 per cent of stock
John Morrell Directors hold 18 per cent
Campbell Soup Dorrance estate owns in trust about 64.3
per cent
Chock Full O'Nuts William Black, chairman and founder, con-
trols about 15 per cent common
Consolidated Foods Nathan Cummings owns 9.4 per cent of
stock; Union Sugar 8.2 per cent
Gerber Products Gerber family and directors own about 30
per cent common
H. J. Heinz Heinz family owns more than 37 per cent
Common
Hershey Chocolate Milton Hershey School owns 66 per cent
of stock
Hunt Foods & Industries Directors own about 7.9 per cent common
Libby, McNeill & Libby Foreign interests own 40 per cent common
A. E. Staley Staley family owns 60 per cent common
Stokely-Van Camp A. J. Stokely, president, and directors own
or control 31 per cent common
William Wrigley, Jr. Wrigley interests and directors control
about 35 per cent common
Eversharp Directors own about 15 per cent of stock
Max Factor Directors own 99.9 per cent common and
33.5 per cent Class A shares
Helene Curtis Industries Directors own 53 per cent of stock
Revlon Directors own 99.9 per cent Class B and
11 per cent common
Pet Milk Leading stockholders own about 65 per
cent common
Anderson, Clayton Directors control 48 per cent of stock
Kellogg W. K. Kellogg Foundation controls 51 per
cent common
Pillsbury Directors control about 6 per cent of stock
Bulova Watch Directors control 19 per cent
Hewlett-Packard Directors own about 70 per cent
Polaroid Directors control about 25 per cent
Tektronix Directors and officers own 57 per cent
Alleghany Allan P. Kirby owns about 40 per cent
common in this company with big holdings
in New York Central RR, Missouri Pacific
RR, Transamerica and Investors Diversi
fied Services
General American Investors Directors own about 11 per cent common
Investors Diversified Services Alleghany owns 43 per cent voting stock
The burden of proof has clearly been shifted in this chapter to those who contend that stock ownership and corporate control are widely dispersed among many small stockholders. All available evidence, direct and statistical, stands as an insurmountable barrier against the contention.
Any low percentages of participation in the foregoing list should not be taken as implying that they exhaust the concentrated interest. All they indicate is that this is the concentrated interest as shown under the rules of the SEC. In every single case, even where only a 5 per cent interest is shown, deeper inquiry would show, almost invariably, that far fewer than 1 per cent of stockholders owned the bulk of the stock or enough to give working control.
Even Fortune, after many years of surrender to the Berle-Means fantasy that ownership is divorced from control in most of the big companies, has now (June 15, 1967 ) come over to recognizing that the big owners have more than a little to say. What Berle-Means did. initiating the fantasy, was to confuse control with operating direction. Company managers, whether themselves owners or nonowners, are always in charge of operations, by tacit or explicit leave of the big owners. The issue of control is seldom raised. But when it is, as most recently with a big company in the case of the New York Central Railroad, the nonowning management walks the plank. In this case the big owners turned out to be the Young-Kirby-Murchison group.
"After more than two generations during which ownership has been increasingly divorced from control," says Fortune rather misleadingly, "it is assumed that all large U.S. corporations are owned by everybody and nobody, and are run and ruled by bland organization men. The individual entrepreneur or family that holds onto the controlling interest and actively manages the affairs of a big company is regarded as a rare exception, as something of an anachronism. But a close look at the 500 largest industrial corporations does not substantiate such sweeping generalizations.
"In approximately 150 companies on the current Fortune 500 list, controlling ownership rests in the hands of an individual or of the members of a single family. Significantly, these owners are not just the remnants of the nineteenth-century dynasties that once ruled American business. Many of them are relatively fresh faces. In any event, the evidence that 30 per cent of the 500 largest industrials are clearly controlled by identifiable individuals, or by family groups, is something to ponder. It suggests that the demise of the traditional American proprietor has been slightly exaggerated and that the much-advertised triumph of the organization is far from total."
While it is true that the big owners are not "just" remnants, they nevertheless, among other things, are indeed remnants. And while true that many are "relatively fresh faces," nearly all show strong ancestral resemblances or bear established ancestral names already mentioned many times in this book. They are heirs.
Fortune's list of 150 concerned only an individual owner or a single family that holds the controlling interest and is active in the management. In the case of the 350 other largest industrials, which were not touched upon, control also rested with a small number of owners (as distinct from nonowning managers and many small stockholders): either multi-family ownership groups consisting of as many as five to seven families or individual members of a functionally related financial group. In no case, except when a company is under court-sanctioned trustees, can it be shown that ownership is divorced from control, although in many cases it is divorced from active management.
While taking cognizance of the Fortune article, and largely endorsing it as far as it goes, I, for my part, learned nothing from it that I have not known for thirty years. Its significance was not that it told something new but that it represented some open backtracking from the Berle-Means contention that ownership has been, or is being, divorced from company control and that full control rather than delegated management is being exercised by professionally trained nonowning managements.
What is most interesting--to me, at any rate--is why steps are now being taken to abandon, at least partly, the Berle-Means fantasy, which has been widely disseminated and has many quite distinguished followers. There was nothing inherently marvelous about the theory; what led to its being given wide currency was that it served to gull an always gullible public with the idea that property was losing its power and that something akin to socialism (but better) was evolving before our eyes. The United States was going to retain private property but at the same time it was going to have collective nonprofit-oriented, professional management in the corporations; if the owners, particularly the big owners, did not like this they would be powerless. As far as that went, big ownership itself was going out of existence.
In brief, this was a useful myth in manipulating restive public sentiment, particularly in the Depression and spectacular World War II. The idea that big stockholders were either impotent or vanishing was widely relished.
As I surmise, the myth is being abandoned precisely because of this depiction of the stockholders, particularly the big ones, as impotent. As a psychiatrist might say, the stockholders are shown in the Berle-Means script as castrates, displaced by bright young men tip from Swampwater College with nothing but technique to offer: know-how and can-do. Objectively serviceable though the myth has been for the big proprietors, it has been subjectively and personally humiliating. Instead of being seen by his wife, children and friends as an authentic bigwig, the boss (which he is), the top owner-manager has had himself publicly presented as something of a corporate tabby cat. As the Fortune sample list of 150 shows, he is anything but this. He is, in fact, far more autonomous and far-ranging than any Soviet industrial commissar, who is always under the tight leash of the Communist Party. The commissar accepts policy; the big owners make or shape policy. They are not the puppets of nonowning corporate managers.
What must have happened in a general way, it seems to me, is that somebody grumbled about this constant depiction of stockholders as the pawns of puissant corporate officials who came from nowhere, and the grumbling was finally beard by the big ears up at Fortune. And now we see the beginning of the dismantling of what had become a sturdy myth, although quite a few academicians are still bemused by it and see something akin to socialism (only better) developing by gradual administrative fiat promulgated by expert nonowning managers to whom profits are secondary, public welfare primary.