XIII.Who Owns America?

XIII. WHO OWNS AMERICA? Helping to promote destructive tax and spending policies of government has been the widespread notion that a few people are far too rich and that a few big corporations own and control far too large a portion of American business. Do 60 families own America? Do 200 corporations own or control its business? Do the millionaires get most of the national income or enjoy most of the goods and services annually produced? If private enterprise benefits only a few very rich families and if its opportunities are monopolized by a small number of Wall Street magnates, then perhaps socialism is preferable even if it is less efficient in production. We find, however, that economic inequality may be viewed in many ways. We get different results and find different problems as we consider: inequality of wealth, inequality of control, inequality of income, inequality of consumption, inequality of enjoyment, well-being, or opportunity.

Certain of these aspects, in turn, may be considered in several ways, including: proportion or amount of wealth (or income, or control) possessed by the upper x per cent of owners (or income recipients) ; proportion or amount of wealth (or income, or control) possessed by the lower x per cent of owners (or income recipients) ; proportion or amount of wealth (or income, or control) in the hands of those possessing more (or less) than a certain sum. Millions Share Responsibilities of Ownership According to estimates of Dr. Willford I. King, outstanding authority in this field, approximately 20,000,000 small-property families, with wealth ranging from $2,000 to $10,000 per family, in 1936 owned 40 per cent of all private wealth. Their wealth included nearly 60 per cent of all household and other consumer goods, nearly 50 per cent of the value of all automobiles, and 56 per cent of the life insurance.

130 DO WE WANT FREE ENTERPRISE? Another 20 per cent of the wealth was owned by 300,000 upper middle class families having from $10,000 to $40,000 worth of property each. About 5 per cent of the wealth was owned by 9,000,000 poorer families, those with less than $2,000 worth of property per family. At the upper end of the scale, some 530,000 families who had $40,000 or more of wealth per family, owned approximately 35 per cent of the privately owned wealth. These figures, however, are a poor measure of economic inequality. Much wealth yields little or no income to its owners. Foi example, even in prosperous years from 40 to 60 per cent of America's corporations pay no dividends to their stockholders. On the other hand, a large share of the benefits from wealth goes to consumers, tenants and employees who own comparatively little of it. One does not need to own a house in order to live in it. Most of the benefits of our factories, farms, railways and mines go to workers and their families, not to the owners.

Ownership of wealth, especially productive wealth, means work and worry. Like other kinds of work, therefore, ownership tends to fall into the hands of those who can better meet its responsibilities. For example, some farmers make excellent tenants but poor farm owners. Unless land is very cheap, most farmers do well to learn by working as hired hands or tenants under supervision instead of beginning as farm owners. Consequently, we shall find that income is much more evenly distributed than ownership of wealth; and enjoyment, or well-being, is more evenly distributed than income. The 200 Largest Corporations It is often said that 200 largest corporations own or control half or more of all business in the United States. This is a misuse of certain figures given in The Modern Corporation and Private Property, by A. A. Berle and G. C. Means, published in 1932. The original statement by Berle and Means was that the largest 200 non-banking corporations in 1929 "controlled" 49.2 per cent, or nearly half, of all "non-banking corporate" wealth.

Assuming that 78 per cent of American business wealth is in the hands of corporations, these authors concluded that the 200 corporations "controlled" 38 per cent or more of all business wealth.

WHO OWNS AMERICA? 131 Taking the National Industrial Conference Board estimate of the national wealth at $367 billions in 1929, Berle and Means concluded that these 200 corporations "controlled" 22 per cent of the national wealth. Following are a few of the criticisms directed by other statisticians at these conclusions: 1. Incorporated business is only 60 to 65 per cent of all private business, not 78 per cent. 2. Nearly half of the 200 companies listed by Berle and Means were railroads and other public utilities. These have been granted a quasi-monopoly position as a matter of public policy and they are subjected to detailed regulation and supervision by government. 3. The "wealth" of the 200 corporations included bank balances, receivables, intangibles (goodwill, patents, leaseholds, treasury stock, organization expenses), prepaid expenses, claims for tax refunds, mortgages, bonds and foreign investments. These were not included in the Conference Board estimate of national wealth with which Berle and Means compared the assets of the 200 corporations.

Allowance for these qualifications would reduce greatly the Berle and Means figures concerning the relative importance of the largest corporations. For example, the 106 industrial concerns in the list, other than utilities, controlled only 22 per cent of the non-financial, nonutility corporate assets, only about 15 per cent of all nonutility business assets, or about 7 per cent of the national wealth. After deducting intangibles from the assets of the 200 corporations, we find that the proportion of national wealth controlled by these corporations, including the railroads and other utilities, is nearer 15 per cent than the 22 per cent given by Berle and Means. These additional facts should be kept in mind: 1. Many lines, especially in the service trades, have relatively small amounts of invested capital compared to their volume of business. The Berle and Means statement, therefore, does not give a fair picture of the concentration of control of business activity, as distinguished from control of business wealth.

Figures showing the proportion of gross business done or showing the proportion of the nation's working force in the employ of the largest firms may be better than comparisons of assets as measures of the degree of concentration of economic control. At any rate, these show less concentration of control than is indicated by comparisons on the basis of assets.

132 DO WE WANT FREE ENTERPRISE? 2. The 200 largest corporations are the very companies which have the largest number of security holders and the widest distribution of ownership. 3. Competition in the industries to which the largest concerns belong is often as active as in any other lines. Even the public utilities, e.g., the railroads, must compete with other producers for labor, capital and markets. Large size, therefore, does not mean economic dictatorship. That these concerns are subject to the same democratic control which is exercised by customers, employees and investors over other private enterprises is indicated by the number of business failures among large concerns. Concerns with assets of $50,000,000 or more showed the following percentages of mortality in the 15 years from 1920 to 1934, inclusive: for industrial corporations, 19.8 per cent for public utilities, 17.4 per cent for railroads, 29.2 per cent* How Much Income Do the Rich Get?

The usual method for describing the extent of inequality in the distribution of income is to state the percentage of national income received by the top 1 per cent or 2 per cent of income recipients. According to one study covering the period 1918-1937,** the top 2 per cent of income recipients received at most about 20 per cent of total individual income. This was in 19281929, the two years of greatest inequality in that period of 20 years. In most other years covered by the study the highest 2 per cent received from 14 to 16 per cent of total income. Conversely, the lower 98 per cent of income recipients from 1918 to 1937 received at least 80 per cent of total individual income and usually 84 to 86 per cent. This way of presenting the figures seems less sensational and perhaps that is why it is seldom used. The picture presented by these figures is* less disturbing when we discover that the "highest 2 per cent" included all incomes down to $5,390 in 1928 and $5,380 in 1929. In other years it was necessary to go well below $5,000, even below $4,000, to take in 2 per cent of all income recipients.

According to the National Industrial Conference Board, the share of individuals with net incomes over $5,000 in the national *Big Business: Its Growth and Place, Twentieth Century Fund, Inc.**Concentration and Composition of Individual Incomes 1918-1037, Mothe Temporary National Economic Committee, Washington, D.C., 1941.

WHO OWNS AMERICA? 133 income fluctuated between 9.1 and 12.0 per cent in the years 1930 to 1941. Most people, however, are not greatly concerned over incomes below $10,000 or even below $25,000. Instead, they want to know how much the really rich get—the "millionaires" and "plutocrats." Dr. King's figures show that those with incomes over $25,000 in dollars of 1913 purchasing power or $41,000 in 1926 dollars received 4.6 per cent of the national income in the United States from 1914 to 1926, inclusive. Since 1930 this percentage is much less. According to the temporary National Economic Committee study mentioned above, individuals getting more than $48,510 in 1928, or $44,750 in 1929, received 8 to 9 per cent of total individual income.* They made up 1/10 of 1 per cent of all income recipients . In most years from 1918-1937 the highest 1/10 of 1 per cent of income recipients received from 4 to 6 per cent of total individual income. But, except for 19281929, this top 1/10 of 1 per cent included incomes far below $44,000. In most years it included incomes below $30,000.

In other words, at least 91 to 96 per cent of total individual income was received by the 99.9 per cent of individuals receiving less than $48,510 in 1928, less than $44,750 in 1929, and less than $40,000 or $30,000 in other years from 1918 to 1937. To find the share of the national income going to the really rich it is necessary to see what the upper 1/100 of 1 per cent of income recipients get. In 1928 the upper 1/100 of 1 per cent included incomes over $239,750 and accounted for 3.5 per cent of total income. For 1929 the corresponding figures were $231,000 and 3.55 per cent. Income tax returns show that incomes over $100,000 in 19281929 amounted to about 5 or Sl/2 per cent of total income before taxes. In most other years from 1918 to 1937 the top 1/100 of 1 per cent received considerably less than 2 per cent of total income. This included incomes below $120,000 and in some years below $80,000.

If $100,000 be taken as the minimum level for the "plutocrat" class, we may say that the rich received at most from 1 to 5 per cent of the national income in the years 1918-1937. •According to the figures of Dr. Rufus Tucker, however, it is necessary to take inall incomes down to $10,000 to include 10 per cent of the national income in 19281929.Quarterly Journal of Economics, August, 1938, p. 558.

134 DO WE WANT FREE ENTERPRISE? Except at the peak of the stock market boom in 19281929, these plutocrats received from ^ of 1 per cent up to about 3 per cent of the national income. In other words, 99.99 per cent of income recipients received at least 96.5 per cent of the national income. Usually they received 97 to 98 per cent of total income. Persons getting less than $75,000, the salary fixed by law for the president of the United States, normally received about 98 per cent of the national income. But this is not the whole story. How Much Income Do the Rich Keep? The above figures include capital gains which are not true income except for professional speculators. Great Britain, France and various other nations did not tax capital gains as income prior to World War II. Including capital gains causes the figures of income distribution to show greater inequality than otherwise in 19281929 and less in 1930-1934. In 1929 capital gains constituted from 36 to 59 per cent of total income going to those in the brackets above $100,000. In 1928 the percentages were larger.

Most of these gains turned out to be merely paper profits which were wiped out in 19301932. Allowance should also be made for higher taxes paid by the rich and well-to-do. In addition to taxes paid by other classes, the higher income groups pay higher rates of income taxes. Effective Federal income tax rates on upper bracket incomes in 1925-1931 ranged from 12 or 13 per cent on incomes of $100,000-$ 150,000 up to 15 or 16 per cent on incomes over $150,000. In 1932 the rates ranged from 20 per cent on incomes of $100,000 up to 46 per cent on incomes over $1,000,000. In 1934 the rates rose to slightly over 32 and 55 per cent and in 1936 to more than 37 and 71 per cent, respectively. The percentages given above, therefore, for the share of national income going to the rich and well-to-do should be discounted by these tax rates in order to find out how much these classes were permitted to keep for themselves.

For example, in 1940 those receiving $100,000 or more had about $375,000,000 after deduction of Federal income taxes.

WHO OWNS AMERICA? 135 This compares with $3,700,000,000 in 1929. If, furthermore, the upper bracket income recipients were permitted to keep a minimum income, the remainder would have been much less than the 1^ to 5 per cent estimated to have been the total share of income going to the rich. If all income above $100,000 in 19281929 had been taken by taxation, the total "take" above the taxes actually collected from these classes would have been about 2l/2 per cent of total individual incomes. In 1930 the total thus obtained would have been slightly less than 1 per cent of total individual incomes. In 1937 it would have been about 1/50 of 1 per cent. In 1937 it would have been necessary to level down all incomes to approximately $25,000 in order to get 1 per cent of total individual income over and above what actually was obtained by taxation from those in brackets above this level. How Much Do the Rich Consume?

Savings and investments should also be considered in measuring what the rich and well-to-do take out of total consumer income. These go to help increase the output of goods and services for other people. They are essential to progress in raising scales of living for lower income groups. For incomes of $15,000 to $20,000, the rate of savings has been estimated at 40 per cent of total income, with higher rates for incomes above $20,000.* Gifts and contributions are also a factor to be considered in estimating what the rich keep for themselves. Average gifts and contributions of the rich amount to 5 to 10 per cent of total income going to upper income groups. These percentages look small when viewed through the eyes of a college president or community chest worker. An economist, however, may offer on behalf of the rich the defense that savings and investment, even though made for "selfish" reasons, should also be considered as contributions to the general good.

Private philanthropy has been immensely helpful in building our libraries, schools, colleges and hospitals. *Consumer Expenditures in the United States, National Resources Committee, Washington, D.C., 1939, pp. 21-22. These rates of saving are lower than estimates given in the Brookings Institution Study, America's Capacity to Consume. The Brookings figures, however, are vitiated by including capital gains which bulked so large in the 1929 incomes of the well-to-do.

136 DO WE WANT FREE ENTERPRISE? But private investment provides the jobs which make the majority of people able to support and care for themselves, and able to pay for the education and care of their children. The highest type of philanthropy is that which makes people able to support themselves. After allowing for the transitory nature of capital gains, for taxes, for philanthropic contributions, and for savings contributed to providing jobs and goods for the public, what is left for the personal enjoyments of the rich has not been a startling proportion of total national income. For example, in the years of greatest inequality since World War I, those with incomes over $100,000 kept for their own enjoyment an amount equal to less than 3 per cent of the national income. In most other years the amount was usually less than 1 per cent. In fact, since 1930 this class has probably been living on its capital.

According to the National Resources Committee study of consumer expenditures for 1935-1936, individuals and families with incomes below $20,000 consumed 96.8 per cent of the goods and services. They consumed 98.5 per cent of the food and tobacco, enjoyed 96.5 per cent of the housing, bought 95.9 per cent of the clothing and 96.9 per cent of the house furnishings, and made 94.8 per cent of the expenditures for automobiles and automobile services. Those with incomes below $5,000 consumed approximately 90 per cent of total goods and services. Income recipients below $5,000 ate 93.1 per cent of the food and smoked 92.8 per cent of the tobacco. They enjoyed 88.4 per cent of the housing, bought 85.4 per cent of the clothing and made 82.5 per cent of the expenditures on automobiles. The Rich Are Not Getting Richer In 1927 P. Sorokin, after examining many sources of information, concluded that the nations of Western Europe have shown "no perpetual trend" towards greater economic equality or inequality.

"During the past few centuries their stratification has been fluctuating up and down; that is all."* A. P. Usher stated that we must go back to the Middle Ages to find greater equality than has existed in England following the Industrial Revolution of the 18th Century. He believed that the English artisans and middle classes gained ground relatively to the ^Social Mobility, p. 62.

WHO OWNS AMERICA? 137 rich during the 19th Century. Furthermore, he found no evidence that the share of the national income going to the propertied classes had been increasing during the preceding century.* Considerable evidence is given by Sorokin, Paul Douglas, Simon Kuznets and W. I. King that the share of labor in the national income has been increasing over the past 60 years, and especially since World War I. Dr. Rufus Tucker, after a study of income distribution in the United States since I860,** concludes that income was more concentrated during and just after the Civil War than since 1916. He says, World War I "did not increase the concentration of income, but greatly diminished it." "There can be no doubt that the millionaires of 1916 suffered severely from the War, although the War did create a few new millionaires."*** Persons with incomes equivalent in purchasing power to between $4,000 and $10,000 in 1929, he finds, have become a larger proportion of the population since 1916. Those with incomes of $50,000 or more have become a smaller proportion.

"Even in 1916 the middle class was more important than in 1870, but since 1916 its growth has been more rapid than that of the very wealthy class, whether one measures to 1929 or to 1935." Studies of Tucker and J. C. Stamp for England from 1860 to 1914 likewise show growth in relative and absolute importance of the middle classes, great improvements for wage earners and improved distribution of income. In all studies of income distribution it should also be remembered that the rate of turnover among the rich is high. As Dr. Tucker says, "It is plain that the large incomes in this country since 1914 have been received by a heterogeneous and shifting group of persons. Millionaires carried up to the heights by the wind of a boom have sunk back, sometimes into bankruptcy, during ensuing depressions." Since 1929 the decline in fortunes of the rich and well-to-do has been spectacular. The depression, together with increases in surtaxes levied on upper bracket incomes during the 1930's, went far * Industrial History of England, p. 511.

**"The Distribution of Income, 1863-1935," Quarterly Journal of Economics, August, 1938. ***Dr. King's work confirms this statement. See The National Income and Its Purchasing Power, p. 172.

138 DO WE WANT FREE ENTERPRISE? toward flattening down the economic pyramid. Taxes now in effect establish a virtual ceiling of $25,000 on all incomes. Is this radical redistribution of income a "social gain"? The Luxury of Risk-Taking Certainly, levelling down does not bring about a corresponding levelling up. The reduction in income of the wealthy during the 1930's was accompanied both by a reduction in the national income and by a reduction in the share of the income going to the poorest 10 to 20 per cent of income receivers.* In the building of prosperity the savings of the well-to-do play a vital role as a chief source of the capital necessary to create new jobs and increase production. This capital is of two kinds, venture capital and loan capital. Venture capital is invested on a profit-andIbss basis. Loan capital is invested on a fixed-return basis. The owner of venture capital is the last to be paid. He takes what is left after paying to wage earners, suppliers of materials, bond holders and management the amounts for which they bargained in advance.

Oftentimes nothing is left over and the owner of venture capital gets no reward for his investment, or a loss results, so that he gets back less than he put in. Without venture capital business stagnates because there is no one to guarantee a return to wage earners and to investors of loan capital. Only the rich, the well-to-do and the successful business concerns can afford to supply this venture capital. They can afford, with at least part of their savings, to take chances which small savers cannot. The rich, those with incomes of $50,000-$ 100,000 and over, formerly supplied about one-third of such capital. Another one-third seems to have come from those getting from $3,000 or $5,000 up to $50,000 or $100,000. The other third came from reinvested profits of successful business companies. This venture capital acts as a business energizer. 1. It finances production of new and untried products.

2. It finances introduction of new machinery and new methods. 3. It finances hiring of new and untried workers. *Enterprise and Social Progress, National Industrial Conference Board, p. 125.

WHO OWNS AMERICA? 13S> 4. It supplies the equity capital necessary to encourage the expansion and circulation of credit along with expanding production and trade. Savings Are Essential to Progress Loan capital also has come largely from the well-to-do and has helped finance the nation's economic progress. Is there any way to improve ways of living without capital ? Whether it be through education or coercion, through business or philanthropy, through introduction of new commodities and services or through increased abundance of existing ones—in every case someone's savings are necessary to make the improvement. More than half of the nation's annual savings, however, normally goes into consumption goods, such as homes, automobiles, refrigerators, radios, house furnishings, and so on. On the whole these increase welfare and in the long run help to raise the efficiency of producers. But increased output of goods and increased wage levels result chiefly from producers' savings. These supply industrial equipment and finance trade. As Dr. Carl Snyder says, "For every dollar of additional value added per annum in manufacturing, as far back at least as 1850, something more than an additional dollar of new capital has apparently been required.

This ratio of capital to annual value of product has been rising slowly in the eighty years from 1850 to 1930, so that it now requires nearly twice as much capital to produce a given value of product. . . . "The entire increase in average wage per wage earner, or in real wages, has been due directly to one factor and to one alone: the growth in capital investment. This must be so, because wages are paid out of product, and the larger product per worker has been wholly due to the increased application of machinery., "The increase in mechanical equipment was possible, only because of the increase in the supply of capital. Therefore, the well-being of the great body of workers has been improved solely through the provision of an adequate supply of capital for investment."* The amount of savings going into production, therefore, largely determines the rate of a nation's progress. ^Capitalism the Creator, pp. 126-127. By permission of The Macmillan Company,publishers.

140 DO WE WANT FREE ENTERPRISE? Snyder estimates the amount of such new investment in 1929 at slightly more than four billion dollars and for the decade of the 1920's at three billion dollars to four billion dollars annually. The private savings of the American people, however, are supplied by approximately 10 per cent of the income recipients.* The excuse is often made that most people are too poor to save anything. But these low-income non-savers in the United States spend billions of dollars annually on luxury goods which only the well-to-do can afford in other countries. Thrifty persons are farsighted and self-controlled. They work harder and more efficiently for the same reasons that they save more. Consequently they earn more and are able to save more. Their savings, in turn, increase their incomes and their margin for savings. True, their wealth increases their power to save. But their willingness and ability to save is a primary factor in the growth of their wealth.

The Menace of Equalitarianism The levelling-down of personal incomes over $50,000 prior to 1940 had destroyed the source of fully one-third of America's business savings and about one-half of the venture capital. The attack on profits, through taxation and "collective bargaining," had gone far to wipe out the source of another one-third of business savings, most of which was invested as venture capital. War taxation is now attacking the middle class and well-to-do— those with incomes between $5,000 and $40,000. It probably has wiped out most of their margin for savings. Inflation for the moment seems to have increased profits and partly restored this source of new capital. This, however, is temporary at best. In part, it is also illusory, because current methods of measuring profits make insufficient allowance for postponed repairs. In any case, current business savings will be needed to meet postwar conversion costs.

In the absence of the abnormal conditions created by inflation, equalitarian policies already in operation will destroy the power of private enterprise to create new jobs or raise the general level of wage incomes in the United States. These policies, therefore, promise to bring to a close the era of rapid progress which made America the hope and envy of all the world. *Consumer Expenditures in the United States, National Resources Planning Board, p. 54.

WHO OWNS AMERICA? 141 The Myth of Social Equality Levelling up by levelling down has always looked like an easy shortcut to Utopia. Yet inequality exists in every thriving organization. No group of people can cooperate efficiently unless organized into a pyramid of authority and influence. Leaderless orchestras, armies without officers, schools without teachers and work crews without foremen have been tried. They don't operate efficiently enough to stay in operation. Religious organizations, schools, trade unions, business concerns, armies and governments show wide ranges of inequality from layman to bishop, or pope, beginning student to graduates, union member to union president, office boy to manager or president, buck private to commander-in-chief, private citizen to president, premier, or king. Even communist and socialist societies, while advocating equality in society at large, are unable to achieve it within their own ranks.

As Sorokin says, these "levellers" tend to develop within their own organizations a higher degree of inequality and oligarchy than most other social groups. And when they become victorious, they often "exhibit greater cruelty and contempt toward the masses than former kings and rulers." "Unstratified society, with a real equality of its members, is a myth which has never been realized in the history of mankind."* As the Russian Bolshevist experiment showed, a share-thewealth program may increase rather than diminish social inequality. It may create a new set of masters more tyrannical than those they dispossess. In addition, general impoverishment for the masses is likely to ensue while the new masters learn their trade. Most people, even among the poorest, recognize these facts. They know that leaders are necessary and they believe in rewarding these leaders generously. Many, however, have been given an exaggerated notion of the extent of economic inequality. This has led them to believe that the "rich" can pay most of the nation's taxes and still have plenty left over in salaries, dividends and interest to provide adequate incentives for business management and investment. They fail to •P. Sorokin, Social Mobility, pp. 12-13.

142 DO WE WANT FREE ENTERPRISE? realize that this false idea is causing them to destroy leadership by taking away the opportunity for the more efficient producers and savers to enlarge their field of service to the nation. "Whosoever Will Be Chief Among You ..." The progress of a people requires improving methods for selecting, training and inspiring its leaders. On the whole, America may well be proud of her economic leaders. Foreign visitors remark on the long hours, high-speed pace, short holidays and frugal diet of our businessmen. They call us money-mad dollar chasers. But this hard work and dollar chasing made American business a model for the rest of the world in efficiency, honesty and generosity of service. American businessmen have been proud of their calling and proud of their success in creating jobs and giving service. It is to the interest of all of us to maintain that pride and self-respect and to rebuild it where indiscriminate criticism has torn it down.

This is necessary to get the most out of our present leaders. It is also necessary to persuade able young men to choose business careers. The progress of America will be limited by the progress of its leadership in understanding and ability. "... Let Him Be Your Servant" Wealth often is gained and used in anti-social ways. So is political power. Progress, therefore, requires improvements in suppressing fraud by means of which individuals may win wealth. This fraud may consist in false promises to customers or investors. On the whole, however, we seem to have made much more progress in reducing fraud in business than in government. Promises of politicians at election time and financial policies of governmental agencies make current business misdeeds look comparatively innocent and harmless. Progress also calls for improvements in ways of using wealth, both in private spending and in business investment.

Ostentatious waste is a vice of the rich which tends to arouse the covetousness of the poor, > ., WHO OWNS AMERICA? 143 Everyone has the same responsibility for learning to spend his money as he has in learning to make it. "The world belongs, by a law of nature, to the disciplined and productive races and not to those who devote themselves to graceful idleness and self-indulgence."* Trusted leadership is necessary for human progress. Suspicion that others are doing too little and getting too much turns our energies from useful work to quarreling and thus makes us poor. We must learn not to suspect or attack others merely because they have wealth and power. Such envy is a vice of selfish, small-minded people who cannot amount to much. We must honor, trust and reward efficient leaders as thoroughly as we punish those who betray our trust. Penalties for wrong doing mean little except as they are contrasted with rewards for right conduct.

One good way to keep leaders from abusing their power is to have a large supply of candidates, or competitors, for positions of leadership. These competitors are eager to discover better ways of doing things. Thus they keep the leaders always on their toes. A large supply of substitutes also helps keep down the salaries and profits of those at the top. It makes for a more equal distribution of wealth and power while improving the quality of leadership. The best leaders, being only human, will make mistakes. If we regulate business so carefully that no one can go wrong, we shall also thereby take away all chance to do better. The only one who never does wrong is he who never does anything. We, the people, therefore, must practice some of the restraint, patience and good will which we expect of our leadership. True it is that a few wealthy persons do some foolish things with their incomes. No economist worthy of the name defends the vulgar display, gambling and extravagant self-indulgence of certain wealthy play-boys and glamour girls.

But the rank and file of the American people have much more to gain than to lose by restoring the high prizes which provided incentive to effort and opportunity for service. •T.• N. Carver, The Religion Worth Having (1940 cd.), p. 20.