Current Economic Affairs/Chapter 10
CHAPTER X
DISTRIBUTION OF WEALTH IN THE UNITED
STATES[1]
The spreading of the farmer-labor movement in the West and the ascendancy of Senator LaFollette and Senator Brookhart and others like them foreshadow attacks upon the corporations and wealthy persons of the United States in the next session of Congress. James A. Frear, a member of Congress from Wisconsin, stated the underlying idea in a recent newspaper interview, wherein he was represented as saying the following:
“Undistributed and unlimited profiteering has brought about an unhealthy economic condition when 2 per cent of the people in this country are found to own 65 per cent of all the wealth… Millions of people who are scraping out a bare existence and fighting against a vicious sales tax urged by big business will approve any effort to curb these unconscionable profits.”
I do not criticize Mr. Frear, or any of the so-called radical senators, for entertaining the belief that 65 per cent-of the wealth of the United States is owned by 2 per cent of the people, for their belief is founded upon what appears to be good authority and is entertained by more scholarly persons than they. Prof. Homer Hoyt in the quarterly of the American Statistical Association for March, 1923, discusses this subject, drawing attention to the discrepancy between the bulk of the wealth being owned by the few and the | bulk of the national income being shared by the many, the latter having been proved by the National Bureau of Economic Research in a way that has received common assent. Professor Hoyt remarks that no one has reconciled these apparently conflicting statements and adds that as a matter of fact both of them are correct, following which he proceeds to try to prove that what seems to be a paradox really is not so. A simpler mind would not so quickly jump to the conclusion that both of these conflicting statements are correct, but rather would deduce that one of them is probably wrong, and knowing the nature of the work of the National Bureau of Economic Research on the national income would conjecture that the error is in the statement respecting the distribution of wealth.
The genesis of the latter statement is as follows: It appears in the ‘Final Report of the Commission on Industrial Relations’? (Frank P. Walsh, chairman) published in 1915, wherein it is stated that “the ‘rich,’ 2 per cent of the people, own 60 per cent of the wealth.” Mr. Frear, Senator LaFollette and the rest: of them therefore find their authority in the report of a governmental commission duly transmitted to Congress. That commission was not, however, the original authority for the statement, but adopted it from the book on “The Wealth and Income of the People of the United States” by Dr. Willford I. King, whom the Walsh Commission correctly characterizes as a “statistician of conservative views,” Reference to the work of Dr. King will show that he did not make the statement in quite so positive a way as represented.[2] However, it is unnecessary to split any fine hairs, for the same reference to the work of Dr. King will disclose also that he made his statements upon the strength of very inadequate data, which will not withstand critical analysis.[3] Dr. King, himself, will agree to this, for he informs me “that he is now in doubt as to whether the amount of wealth escaping probate is not so large as to cause a curve showing the distribution of estates probated to give a very erroneous impression concerning the distribution of wealth among decedents.”
We have here an instance of a great misconception, that may lead to grievous political consequences, being founded upon the unsupported statement of a single economist, made eight years ago when the data available were far less than what exist at present; a statement that is moreover based upon a method of computation whose very validity is challenged. It has been worth while to go into this explanation, even at the risk of being tedious, for if we are going to try to ascertain the truth it is desirable first to expose previous errors and misconceptions. This is moreover an excellent example of how unsupported statements are perpetuated, are incorporated and endorsed in governmental reports, and become accepted as facts without anybody stopping to consider whether they really are so, or not. A study of the distribution of wealth in the United States will surely be complicated and probably more or less uncertain in its results. A method that immediately suggests itself is an analysis of the inventory of the national wealth. In my book on the “Wealth and Income of the American People” I offered such an inventory, expressed in terms of the dollar of 1913. My totals were higher than would be indicated from census estimates for previous years, and I made it clear why the previous census estimates are to be viewed as untrustworthy and should not be used in comparison with other estimates. I made my own estimates in great detail and was quite frank in explaining how I arrived at them. I am unaware of any serious criticisms of them. I feel justified therefore in assuming that my figures are nearly enough correct.
I estimated that the wealth of the United States at the end of 1920 was as follows:
| Physical property in the United States | 272.8 | billion dollars |
| Foreign credit balance | 17.8 | |
| Total | 290.6 |
I expressed the opinion that the foreign credits are a doubtful asset. In so far as they are owed to the nation this will not enter extensively into a discussion of the distribution of wealth, for the loss, if there be any, will be spread over all classes of people. Any loss on commercial credits and foregin investments will fall, however, mainly upon the banks, corporations and investors. It may be remarked here that a considerable loss has already been experienced by the extensive speculation in foreign currencies.
I divided my estimate of the physical wealth at the end of 1920 according to heads. A condensation thereof is as follows, in billions of dollars:
| Owned by the people in common | 17.125 |
| Farms, live stock, etc. | 75.035 |
| Houses in cities and towns | 55.244 |
| Other urban real estate | 23.676 |
| Factories, railways, mines, etc. | 57.320 |
| Furniture, clothing, jewelry, etc. | 15.900 |
| Gold and silver bullion and coin | 3.823 |
| Automobiles | 4.594 |
| Ships, yachts, wharves, drydocks | 1.063 |
| Stocks of goods | 19.000 |
| Total | 272.780 |
An itemization of the industrial property, including public utilities, as of the ends of 1916 and 1920, is as follows. It will be observed that in these estimates the value of the railways of the United States is put at a much higher figure than was tentatively allowed by the Interstate Commerce Commission.
| 1916 | 1920 | |
| Mines | $ 3,880,000,000 | $ 3,269,000,000 |
| Railways, steam | 24,500,000,000 | 25,500,000,000 |
| Railways, electric | 5,361,734,000 | 4,000,000,000 |
| Express companies | 38,597,253 | 34,691,199 |
| Manufacturing machinery and tools | 14,500,000,000 | 15,500,000,000 |
| Meat packing plants | 250,000,000 | 350,000,000 |
| Telephone and telegraphs | 1,475,000,000 | 1,800,000,000 |
| Pullman cars | 130,000,000 | 150,000,000 |
| Tank cars | 63,000,000 | 180,000,000 |
| Petroleum pipe lines | 400,000,000 | 608,000,000 |
| Petroleum tankage | 50,000,000 | 60,000,000 |
| Light and power plants | 2,900,000,000 | 4,058,000,000 |
| Gas lighting plants | 1,250,000,000 | 1,500,000,000 |
| Waterworks, privately owned | 300,000,000 | 310,000,000 |
| Totals | $55,098,331,253 | $57,319,691,199 |
Of the above enumerated wealth a good deal may be allocated as being of general ownership besides what has been so specified. Thus some of the gold and silver bullion is owned by every person who possesses gold and silver certificates, which he uses as currency. The wharves and drydocks are largely municipally owned. The estimate for the value of ships represents mainly the national fleet. There is certainly a wide distribution in the ownership of the automobiles, about one-third of which is ascribed to the farmers of the country. Also in the ownership of furniture, carriages, clothing and jewelry. Although the well-to-do possess a great deal more of those things per person their number is too small to enable their aggregate of such possessions to loom very big. The stocks of goods are owned partly by the producers of raw materials, including the farmers, partly by the manufacturers who fabricate them, and partly by the merchants, wholesale and retail, who distribute the finished products.
The urban real estate, valued at 78.920 billion dollars, represents about 20 million houses and apartments, outside of the farms. It is well known that to a large extent the American people own their own homes. According to the last census 55 per cent of the families in the United States rented the houses in which they lived, while 45 per cent held title to them. Of the latter about five-eighths of them held their property free from encumbrance, while three-eighths held it subject to mortgage. These percentages are calculated upon all of the dwelling, including those on the farms, but we may apply them to the 20,000,000 urban dwellings without going far astray.
In my “Wealth and Income of the American People” I estimated the 20,000,000 houses and apartments available for use by people other than farmers in 1916 as being of an average value of $2,880, including the land on which they stood, giving a grand total of 57.6 billion. My estimate for the value of other urban real estate was 24.7 billion. With the aid of the census figures we may proceed further with the analysis. Of the 57.6 billion in houses, about 31.6 was owned by landlords. Of the 26 billion remaining about three-eighths or roughly 10 billion was mortgaged. Inasmuch as mortgagees are generally indisposed to lend more than two-thirds the value of real estate we may conjecture reasonably that the total of mortgages on the homes occupied by owners in the United States was about 6⅔ billion dollars.
Dr. L. C. Gray of the U. S. Department of Agriculture at a meeting of the American Economic Association in December, 1922, presented a compilation and analysis of the wealth and indebtedness of the farmers of the United States. He estimated the total farm capital at about 95 billion dollars, of which he reckoned about 73 billion dollars as belonging to farmers who owed about 11 billion, making the net worth of the farmers proper about 62 billion. Dr. Gray estimated that nearly half of the total farm property not owned by farmers was held by retired farmers. It may be conjectured that the remaining ownership of farms is largely by local merchants and bankers. These data are not seriously out of tune with my own estimates.
It will be perceived that Dr. Gray’s estimate of the net worth of farmers is about 21 per cent of my estimate of the total national wealth, while his estimate of the farm capital is about one-third. This in itself is an important thing upon which to fix attention, for it is well known that the “rich” class that is especially the target for invective and taxation, is not in the habit of ! either investing in farms or lending money upon them. f 33 per cent of the wealth of the United States be in farm capital the “rich 2 per cent”’ of the people could not own 65 per cent of the wealth and leave anything for the millions of people other than themselves and the farmers, which result would be a prima facie absurdity.
Even the lowest grade of the laboring classes possess some wealth. Thus, Dr. L. C. Gray in his paper on “Accumulation of Wealth by Farmers” in the American Economic Review, Supplement, for March 1923, estimates that out of 4,161,690 farm laborers, reported in the census for 1920, probably about one-half of them possess independent accumulations of wealth to the amount of an average of $350 per person. There is scarcely a family among wage earners that does not possess something in the way of furniture, clothing, and tools of trade. And, moreover, as will subsequently be shown a majority of them must have something in the savings bank.
Obviously this brings us right up to the consideration that the titular holders of the wealth of the United States may not actually own it free of claim by the money lenders. The farmers of the country do not own their farms in full. The townspeople who have title to their houses to a certain extent have only an equity in them. I have already estimated the mortgages on the latter class of property as amounting to about 62⁄3 billion dollars. According to the last census there were mortgages on about 40 per cent of the farms, aggregating about eight billion dollars. It does not follow from this, however, that such claims appertain to “the rich.” The greatest lenders of money to the farmers are the life insurance companies, whose assets are the combined property of many millions of policy holders. So it is with the mortgages on urban real estate, the money for which comes largely from the life insurance companies and the savings banks, wherefore the claim upon these forms of property rests among many millions of people.
Besides mortgages on real estate claims on the physical wealth of the United States by others than the titular holders of the property are represented by government bonds and notes, state, county and municipal bonds, corporate bonds, and notes for bank loans. The obligations of the Federal Government are of course collectable out of everything through the medium of taxation. The state, county and municipal bonds are in the same way first liens on all the property within the respective political subdivisions.
The public debt of the United States, June 30, 1922, was about 23 billion dollars, represented chiefly by liberty and victory bonds. It was estimated by Treasury experts at that time that there were at least 10 million holders of these bonds. There were some concentrated holdings. Thus, at the end of 1922 the national banks owned 234 billions of United States securities. It is obvious however that upward of 10 million bond owners implies a wide distribution of this national claim upon the wealth of the country.
The total of state, county and municipal indebtedness in 1922 was about eight billion dollars. These bonds are probably owned largely by the more wealthy class of investors.
The total of loans and discounts by the national banks at the end of 1922 was 11,600 million dollars. These advances were to a large extent attributable to carrying the country’s necessary stock of goods, both through the process of manufacture and through the period of sale. To a smaller extent they were loans to brokers and other persons on stocks and bonds. But here again it was not the bankers’ own money that was loaned. Rather was it, in the main, the aggregate of the deposits of a great many people.
It does not follow from the fact that certain interests are money lenders that the source of supply is a relatively few wealthy people. The greatest money lenders of all are the savings banks and the life insurance companies. At the middle of 1922 there were in American savings banks 26,637,831 accounts, aggregating $18,087,493,000. At the end of 1920 the life insurance companies had assets of $7,319,997,019, which was contingently the property of over 40 million policy holders. Of this great fund 32.29 per cent was invested in mortgages, divided about half and half between farm mortgages and the other kind made up of city, building, home and industrial loans. About 26 per cent was invested in railroad bonds and stocks. Loans on policies amounted to $820,000,000 and investments in government bonds to $772,000,000. The other investments were mainly in state, county and municipal bonds.
In all of these forms of investment—savings bank deposits, life insurance and government bonds—there have been important increases since 1916. This does not reflect increase in the national wealth, which, as I have shown in my book, did not occur in the period 1916-20 and to but relatively small extent in 1921–22. What it does show is a transfer of the claims upon the national wealth from one group of people to another, probably from a relatively small group to one that is very much larger. The last is indicated by the great increase in the number of savings bank accounts, government bondholders, etc. The depletion of the smaller class is much greater than the transfer to the larger class, the difference being measured more or less by the decline in the national rate of saving from 15 per cent of the national income pre-war to perhaps 7 or 8 per cent in 1920–22.
The maim features of internal indebtedness, which represents claims upon the physical wealth of the country by others than the titular holders, may now be summarized as follows:
| Billion | |
| The national debt | 23.0 |
| State, county and municipal debts | 8.0 |
| Loans by national banks | 11.6 |
| Savings bank deposits | 18.0 |
| Life insurance assets | 7.3 |
| Total | 67.9 |
The above summary omits obviously the claims of state banks and private persons. Conjecturally these would be relatively insignificant in the aggregate. On the other hand it is positive that there are duplications in the above summary. For example, some of the assets of life insurance companies are invested in government bonds and some of the loans of national banks are employed for carrying such securities. Moreover a considerable proportion of the life insurance assets are invested in railroad bonds and stocks. Bearing these conditions in mind, and making due reservations respecting uncertainties, it appears probable that about 20 to 25 per cent of the wealth of the country is mortgaged internally, in one way or another. As has been previously shown the mortgagees are in the last analysis great in number, wherefore there is implied a diffuse distribution of these claims. We may come positively to another conclusion. About one third of the national wealth is in farm capital. Nearly one half of the American urban homes are occupied by their owners. Combining these thoughts with the wide distribution of savings bank accounts, life insurance policies, government bonds, and the stocks and bonds of corporations it is indisputable that the American people are preponderatingly property owners.
Even the property of the railways and industrial corporations is widely distributed through stock ownership. Thus, at the end of 1922 the Pennsylvania Railroad had 140,000 stockholders and 90,000 bond holders, whose combined number was almost equal to the employees of that company, who aggregated about 243,000. So it is with many of the great industrial companies, such as the United States Steel Corporation, the General Electric Co., the General Motors Co., the public service corporations like American Telephone and Telegraph Co., and so on.
The Interstate Commerce Commission recently completed the compilation of the number of stockholders of Class 1 railroads as of Dec. 31, 1922. Class 1 railroads are roads with operating revenue above one million dollars annually and represents all of the important mileage of the railroads of the country. There were at that time 777,132 railroad stockholders, which was an increase of 24,165 stockholders over the same date in 1921. Thus it appears that considerably more than three-quarters of a million persons own the railroads of the United States and this does not take into account the very many other persons who own a distributive share in life insurance and other companies that may directly have railroad stocks as part of their assets. Nor does it take into account the large number of stock-holders whose holdings stand in the name of brokers as securities for loans.
There is some evidence respecting the ownership of corporate securities in the aggregate in that the dividends reported by income tax payers fall short of the estimates of dividends paid by corporations. The latter statistics are not fully reliable. I should hesitate to characterize them as being any more then roughly indicative. With due allowance for these uncertainties we may conservatively draw the deduction that about 75 per cent of the industrial property of the United States was owned by the income tax payers of 1916.[4]
By making some bold assumptions we may now proceed to estimate the total holdings of the class that I have arbitrarily defined as “the rich.” I shall assume that they owned 75 per cent of the industrial property, 75 per cent of the stocks of goods, rather more than that proportion of the gold and silver; that they owned all of the foreign credits other than national; that they owned automobiles, furniture, clothing, etc., to the average value of $5,000 each; that they owned all of the urban houses that are rented, all of the other urban real estate, all of the state, county and municipal bonds, all of the mortgages on houses and farms, and one half of the government bonds, less only what is attributable to the savings banks and life insurance companies. We may then summarize as follows:
| Industrial property, 75 per cent thereof | 43.0 |
| Stocks of goods, 75 per cent thereof | 14.3 |
| Foreign investments and credits | 6.8 |
| Furniture, automobiles, etc. | 2.2 |
| Urban houses, 55 per cent thereof | 31.7 |
| Other urban real estate | 24.7 |
| Gold and silver | 3.0 |
| Mortgages on urban real estate | 6.7 |
| Mortgages on farms | 8.0 |
| Government bonds | 11.5 |
| State and municipal bonds | 8.0 |
| Gross total | 159.9 |
| Assets of savings banks and life insurance companies | 25.3 |
| Net total | 134.6 |
| 134.6 + 290.6 = 46 per cent. |
It is certain that the rich 2 per cent of the people do not own all of the stocks and bonds of industrial enterprises and it is highly improbable that they owned all of the rented urban real estate or all of the shops, hotels and other commercial buildings. But even if they did so their ownership of the national wealth at the end of 1920 would be not more than 46 per cent. This analysis indicates that figure as the maximum limit of possibility without, however, giving us any positive evidence as to what the percentage really is.
Too much emphasis can not be put upon this being the maximum limit of possibility. Instead of “the rich” owning all of certain classes of real estate, to the aggregate value of 56.4 billion dollars, it will subsequently appear that their receipts from rentals capitalize at only about 61⁄2, billion. It will appear, moreover, that instead of 43 billion in industrial property the dividends received by them capitalize at only about 351⁄2 billion dollars.
Fortunately we may approach this subject in quite a different way and one that is more positive. In 1916 there were 437,000 income tax payers, among whom the number of farmers was negligible. The year 1916 was not one of extraordinary abnormality in the light of what we subsequently witnessed, the general index number of that year being only about 125. Assuming that the 437,000 income tax payers were all heads of families and that their average family comprised four persons we shall account for 1,748,000 people out of a total population which is estimated at 101,722,000 for the middle of 1916. In other words the income tax payers represented 1.7 per cent of the total population on the assumption that they were all heads of families, which of course is the maximum that can be assumed.
These tax payers reported among other things their income from rents, interest and dividends. We may reckon that gross rentals averaged 10 per cent of the value of the property from which derived. We may reasonably conjecture that interest averaged 5 per cent on the principal and that dividends averaged 6 per cent. The interest average may have been a little lower than the assumption while the dividend average may have been a little higher, but although this is all conjectural the fact can not be at any great variation and would not materially modify the broad result. We may then capitalize the reported incomes as follows:
| Rents | $ 643,802,657 + 0.10 = | $ 6,438,026,570 |
| Interest | 1,080,879,405 + 0.05 = | 21,617,538,100 |
| Dividends | 2,136,468,625 + 0.06 = | 35,607,810,417 |
| Total | $63,633,425,087 |
The remainder of the personal income in 1916 was derived from salaries and business. Respecting salaries there is of course no question in interpretation. Business income, reported at $3,010,404,924 is a combination of the products of personal service and capital employed in the business. We have no means for making any separation between these two elements. There is included in this the earnings of professional men, of traders, and of merchants conducting unincorporated business. No guess for the amount of capital in use in this way would be justifiable, and we can do nothing but disregard this matter, simply making a mental reservation respecting it.
It appears from the foregoing that the 437,000 income tax payers of 1916, representing 1.7 per cent of the population at the maximum, derived income in the form of rents, interest and dividends from property valued at about 63.7 billion. It may be argued, and properly, that this class to a large extent occupied houses of its own, the rental value of which does not appear in the income tax returns. Assuming that each of these tax payers owned a $10,000 house, which. is improbable, the total of such real estate would be $4,370,000,000. Over-estimation here may in part offset neglect of the capital used in private business. On the face of things therefore, the property belonging to income tax payers aggregated about 68 billion dollars. Making comparison with the physical wealth of 1916 estimated at 268.4 billion dollars for the internal and 0.3 billion dollars for the external it appears that 1.7 per cent of the population owned about 25 per cent of the total wealth. I am inclined to put this as the minimum limit and say that the class specified owned at least that proportion of the national wealth.
By the first method of analysis there has been established the maximum limit of 46 per cent. The truth is probably somewhere between these extremes, but much nearer to the lower than to the higher. A fair guess might be something like 30 per cent.
Attention should be drawn here to the distinction between physical or tangible wealth and capitalized wealth, which includes also the intangible. A good illustration of the latter is the value of a newspaper, which may be rated at a high figure without there being much physical property associated with it. The difference between the market value of corporate securities and the physical property owned by the company is ascribable to intangible wealth, which may be a reflection of organization and experience, maybe of good will, maybe of patent rights. If the aggregate market value of a stock be less than the cost or reproduction value of the physical property the chances are that the usefulness of a portion of the latter has disappeared and consequently that some physical value has been extinguished. This may not be the case however with respect to public service corporations whose economic freedom is restricted by legislation.
There has never been any estimate of the national wealth that includes the intangible. The aggregate value of the securities of our industrial corporations must logically be in excess of estimates of their physical property. On the other hand the aggregate market value of the railway securities is at present inferior, and the same may be true of other kinds of public service corporations. Confusion involving these points may introduce errors in the computations in this paper, but they will not be of serious, certainly no tinvalidating, nature. If the intangible wealth, pertaining solely to the industrial enterprises, be guessed at 20 billion dollars[5] on top of the 57 billion of physical, computation by the first method would give 48 per cent instead of 46 per cent; and by the second method, which is founded on capitalization, we should arrive at 23 per cent instead of 25 per cent.
With full recognition of the roughness of the work in this study, I hold it be sufficient to dispel the idea that something like 65 per cent of the wealth of the United States is owned by less than 2 per cent of the people, and consider that it clears away the seeming paradox between that idea and the established fact that about 70 per cent of the national income, other than agricultural, goes to the wage earners, with only 30 per cent to property and management. Of that 30 per cent a large part is ascribable to professional and personal earnings and less than half of it to capital properly speaking.
My classification of “the rich” as those who possessed incomes of $3,000 and upward per annum in 1916 is decidedly a broad one. There were 375,000 income tax payers classed between $3,000 and $20,000 per annum in that year, and the aggregate of their income was 40 per cent of the total. I do not mean to fix $20,000 as the line of demarcation between those who are rich and those who are simply well-to-do, but merely to point out that this exhibition is in line with all the other evidence respecting the great diffusion of wealth in the United States. There is some concentration in great fortunes like those of Henry Ford and John D. Rockefeller to be sure, but clearly it does not amount to anything like what is popularly supposed.
The two methods of examination that I have used in this paper may be described concisely as (1) analysis of inventory and (2) capitalization of income. Those mere descriptions are in themselves convincing as to the soundness of the thought. Pursuance of the latter has not always been satisfactory, owing to the lack of much desirable data. I am therefore conscious of the deficiencies in my study, but I think it is the most helpful adventure into a complicated subject that has been made up to the present time. While there is a good deal in it that is conjectural there is also a good deal that is positive, especially as to the great percentage. to which the farms, live stock, etc., bulk in the total of the national wealth; also the great percentage of the urban real estate and the widespread ownership thereof. The net worth of the farmers of the country, who are not classed among the rich at all, is vast, as has been shown by Dr. Gray. Among the farmers, there are inequalities just as among other people; there are well-to-do farmers and there are tenant farmers who possess but little.
Such concentration of wealth as exists in the United States is nothing that either requires any apology or justifies any attack upon it. In general the people in the United States who possess wealth have earned it and have saved it out of their thrift. There is an enormous difference in the intelligence and earning capacity of people. The biologists tell us that only about one person out of 6,000 in the United States is in the “Who’s Who” class. That would imply less than 20,000 of that class in the United States. The number of people who are capable of earning and saving money is much greater than that, but nevertheless it is small in comparison with the total population.
- ↑ Published originally in The Iron Age, Oct. 4, 1923.
- ↑ The agrarian Senators refer to 65 per cent of the national wealth being owned by “the rich.” The Walsh Committee says 60 per cent. Dr. King’s original statement was that “more than half, in fact, almost three-fifths of the property is possessed by this fiftieth part of the people.” His statement has therefore been magnified in repetition, but we need not cavil especially at this.
- ↑ Doctor King’s original deductions were drawn solely from an analysis of estates probated in Massachusetts and Wisconsin.
- ↑ In 1916 the dividends reported by the Bureau of Internal Revenue as having been received by income tax payers amounted to $2,136,469,000. The total of dividends paid by corporations was estimated at $3,783,900,000 by Dr. Friday and at $3,389,000,000 by Dr. Knauth. The dividends received by income tax payers were therefore 56.46 per cent of the total estimated by Dr. Friday and 63.04 per cent of the total estimated by Dr. Knauth. This would of course imply ownership of dividend paying stocks in like proportion. I have elsewhere expressed the opinion that Dr. Friday’s estimate was too high, but in the light of later consideration I think that may not be so. The comparison in this paper between the amount of dividends received by income tax payers and the valuation of industrial property is rather indicative of the contrary. Anyway, these considerations lead me to think that my conjectural estimate of not more than 75 per cent of the industrial property of the United States being owned by the income tax payers of 1916 is reasonably conservative. Inasmuch as the ownership of the stocks of goods is of similar nature the same percentage is roughly assumed for that item. There is no foundation for the guess that this class owns only half of the government bonds other than the data of the Treasury Department showing a wide distribution thereof.
- ↑ Roughly speaking there are about 60 billion dollars worth of railway and public utility securities listed on the stock exchanges and about 10 billion dollars worth of industrials (Wall Street Journal). These totals are in excess of my estimates of the corresponding physical property.