-Caveat Lector- an excerpt from: The Founding Fortunes Michael Patrick Allen�1987 All rights reserved. E. P Dutton ISBN 0-525-48484-1 ----- An excellant and interesting book. Om K --[1]-- The Corporate Rich The United States is a very wealthy nation, but much of its wealth is owned by a small minority of its citizens. According to the best estimates, less than I percent of the population owns roughly a quarter of all the personal wealth in the country, including half of the stocks and bonds owned by individuals. Furthermore, a large proportion of this wealth is owned by the members of a few hundred families. By and large, the members of these families are multimillionaires. Some of the richest, such as David Rockefeller and Henry Ford II, are worth hundreds of millions of dollars. A select few, like Gordon Getty or Paul Mellon, are even billionaires. Most of the rest, however, are worth somewhat less. In particular, many of the younger members of these families are currently worth only a few million dollars apiece. Although most of these individuals are not fabulously rich, their families are extremely wealthy. As a group, they comprise what Ferdinand Lundberg once labeled "the rich and the super-rich." Although many American families are relatively affluent, few are truly rich. Even among the affluent, the major asset of most families is usually the equity they have in their homes. The truly rich have equity in their homes, of course, but they also have substantial investments in stocks, bonds, and commercial real estate as well. These investments alone are usually sufficient to provide them with generous incomes. Indeed, the fundamental distinction between the truly rich and the merely affluent is that the rich receive enough income from their investments to be able to live out their lives in comparative luxury without the necessity of ever seeking gainful employment. Much of the wealth owned by the richest families in America is corporate wealth. In fact, almost all of the really big fortunes in America were derived, at least initially, from the ownership of corporate stock of one kind or another. Indeed, most wealthy families owe the bulk of their fortunes to their original stockholdings in a single corporation. Large corporations often begin as small firms, owned and managed by the members of their founding families. As these firms grow into large corporations, the corporate stock owned by these founding families sometimes appreciates greatly in value. The corporate rich, then, consist of the members of wealthy capitalist families who amassed large fortunes from their original stockholdings in a family corporation. Of course, not all new companies become large corporations. To the contrary, a majority of new businesses fail within a few years. But a few, through either good management or good fortune, succeed beyond all expectations. The founders of these firms and those who invested in them at the outset often become very wealthy. For example, William R. Hewlett and David Packard founded their own electronic instruments firm in 1939 with an initial cash investment of $538. Forty years later, their stock in HewlettPackard was worth over $3 billion. Although billionaires are few and far between, many successful entrepreneurs have become multimillionaires. On the basis of his own analysis of the very rich, C. Wright Mills, an ardent critic of corporate capitalism, was forced to conclude that the American economic system was successful "as a machine for producing millionaires." Despite the fact that they own a major share of all the personal wealth in the country, surprisingly little is known about the corporate rich in America. With only a few notable exceptions, they lead intensely private lives, which render them practically invisible. This lack of visibility is no mere accident. To the contrary, it is the result of a conscious strategy. In order to preserve their privacy, many wealthy individuals have chosen to lead lives of deliberate obscurity. They attempt to conceal their family ties and the extent of their wealth from everyone except other family members, close friends, and a few trusted business associates. With only a few exceptions, most of the members of the richest families in America are entirely unknown to the public at large. For example, as the result of the publicity generated by recent legal battles, Gordon Getty has become widely known as a billionaire. However, his equally rich brother, J. Paul Getty, Jr., remains virtually unknown. The reasons for this conscious pursuit of privacy through obscurity are obvious enough. Anyone with a few million dollars to spare is fair game for those in search of money. To begin with, the corporate rich are natural targets for professional fund-raisers from both charitable causes and political campaigns. They also attract unsolicited business propositions from wandering legions of hapless inventors and speculators. Last but certainly not least, they seek privacy for reasons of personal security. The scions of several wealthy families have fallen victim to kidnapping and extortion attempts. For the corporate rich, obscurity is often the cheapest and most effective form of security. Although the corporate rich may be largely invisible to the rest of society, they are certainly not inconsequential. They may have relinquished their claim to celebrity status in order to safeguard their privacy, but they have not relinquished their wealth or the power inherent in that wealth. In a society in which money is easily translated into power, the very rich are also very powerful. Although they would probably deny that their wealth and their family ties give them any special privileges, the corporate rich do exert a pervasive influence in social and political affairs at both the local and the national level. Sometimes this power is exercised directly in an overt and public fashion. For example, the members of wealthy families are well represented among the major contributors to political campaigns, especially those for national office. Before the enactment of recent campaign-finance reforms, it was not unusual for the corporate rich to give large sums of money to their favorite political candidates. For example, Richard M. Scaife, a grandson of Richard B. Mellon, one of the early investors in Gulf Oil and Aluminum Company of America, gave $1 million to the reelection campaign of President Nixon in 1972. The corporate rich also exert a powerful influence on American society in less direct and more subtle ways. Members of these wealthy capitalist families are, of course, directly involved in the economic activities of the country as a result of their positions as officers, directors, and principal stockholders in many major corporations. They also exert considerable influence on the formation of public policy through the activities of the large philanthropic foundations endowed and controlled by family members. THE WEALTH PROBLEM In general, there are two very different types of individuals among the corporate rich. There are those who have accumulated large fortunes and those who have simply inherited them. As a rule, public attention is focused on entrepreneurs who have amassed great wealth on their own. Depending on the particular historical circumstances and the general political climate, these wealthy entrepreneurs have either been venerated as brilliant "innovators" or condemned as avaricious "speculators." Needless to say, the distinction between the two is often somewhat arbitrary. As a rule, they are simply individuals who were early investors in companies that, as a result of either superior management or fortuitous circumstances, grew into large corporations. Despite the fact that successful entrepreneurs receive most of the publicity, they are a distinct minority among the corporate rich. In terms of sheer numbers of people, most of the corporate rich in America are inheritors. Although they may have made some money on their own, these inheritors owe the bulk of their wealth to gifts and bequests they received from relatives. The fabled entrepreneurs of this century, like John D. Rockefeller and Henry Ford, are gone, but their families and much of their fortunes endure. The Rockefeller and Ford fortunes, only slightly depleted by estate taxes and charitable bequests, are now owned by scores of individuals, all of them descendants of the founding entrepreneurs. None of these inheritors will ever be as rich, in real terms, as the founders of these fortunes, but most of them are nevertheless extremely wealthy. Indeed, the Rockefellers and the Fords remain among the wealthiest families of the corporate rich. The distinction between entrepreneurs and inheritors is at the heart of the ambivalent attitudes that most Americans have about great wealth. This distinction is also apparent in government policies concerning the redistribution of wealth. It has never been a crime to be rich in America. In point of fact, the tax system actually encourages the initial accumulation of wealth. For example, there are no property taxes at the federal level on the ownership of stocks and bonds as such. As a result, individuals who have most of their fortunes invested in these types of securities pay no taxes at all on the bulk of their wealth. They pay federal income taxes only on the dividend and interest income that they receive from these securities. Until recently, even the profits that the corporate rich accrued from the sale of their stocks and bonds were not subject to the usual income taxes. Instead, these profits were taxed at the preferential rate accorded capital gains. Although the federal tax system does not hinder the accumulation of wealth, it does discourage the transfer of great wealth from one generation of family members to the next. The United States, like most advanced industrial societies, has created an elaborate system of gift and estate taxes. These taxes were never intended to raise much revenue, at least not at the federal level. Instead, federal gift and estate taxes were imposed primarily to prevent wealthy individuals from transferring their entire fortunes to their descendants. Consequently, these taxes are formally progressive, such that large intergenerational. transfers of wealth are subject to higher gift and estate tax rates than small transfers. Laws are a reflection, albeit an imperfect one, of the dominant normative principles of a society. The very fact that the United States has progressive gift and estate taxes to limit the intergenerational transfer of wealth provides concrete proof of the popular sentiment in the country concerning the inheritance of large fortunes. Although most Americans accept the accumulation of great wealth by successful entrepreneurs as an inevitable consequence of the free-enterprise system, they do not accept the inheritance of this wealth by the progeny of these entrepreneurs with the same equanimity. To begin with, inherited wealth on a large scale is seen as an affront to the principle of equal opportunity, as it provides a select few with almost insurmountable material advantages. Moreover, the fact that wealth can be translated into economic and political power is viewed by many as a threat to the democratic principle of "one man, one vote." Indeed, it was largely the fear of a "hereditary plutocracy" that led to the passage of the first nominal estate taxes in 1916. However, really progressive gift and estate taxes did not gain widespread public support until after the onset of the Great Depression. In his message to Congress calling for the passage of more progressive gift and estate taxes in 1935, President Roosevelt declared unequivocally that "inherited economic power is as inconsistent with the ideals of this generation as inherited political power was inconsistent with the ideals of the generation that established our government." Although the taxes designed to prevent the inheritance of great wealth have been revised many times since that time, they have never been repealed. The existence of formally progressive gift and estate taxes has given rise to the popular belief that the corporate rich are a dying breed in America. According to the conventional wisdom, wealthy capitalist families have been driven to the brink of extinction by a system of progressive taxation that prevents the inheritance of wealth on a large scale. In point of fact, the corporate rich are alive and well in America. Despite widespread popular support, gift and estate taxes have failed to reduce substantially, let alone eliminate entirely, the inheritance of great wealth in America. A careful enumeration of the wealthiest individuals in the country demonstrates that a clear majority of them are inheritors. The failure of the tax system to prevent the inheritance of these fortunes is attributable primarily to the development of a series of often elaborate strategies for avoiding these taxes. Unlike tax evasion, which involves an element of criminal fraud, tax avoidance is simply the reduction of taxes by strictly legal means. Members of the corporate rich have retained some of the best lawyers in the nation to devise means for avoiding gift and-estate taxes. As a matter of fact, the various strategies devised to circumvent these taxes have been so successful that one tax expert has termed the estate tax a "voluntary tax." The clear implication is that most wealthy individuals can, with only a modicum of sound legal advice, succeed in passing on most of their wealth to their progeny. Consequently, the corporate rich in America have the best of both worlds. While popular sentiment against the inheritance of large fortunes is assuaged by the existence of formally progressive transfer taxes, the actual inheritance of great wealth continues almost unabated. It is hardly surprising to discover that there are so many public misconceptions about the efficacy of the present system of gift and estate taxes. The scholar and the layman alike are often misled by news accounts that fail to disclose the true extent of inheritance within wealthy families. Whenever a rich entrepreneur dies, press accounts of his wealth are typically limited to a description of the estate filed for probate. Little attention is paid to the fact that much of the family fortune may have escaped probate altogether as the result of lifetime gifts. The major cause of such journalistic omissions is the financial secrecy maintained by almost all corporate rich families. There is the example of Haroldson L. Hunt, a relatively unknown Texas oilman before he was proclaimed as the richest American by both Fortune and Life magazines in 1948. Yet when Hunt died in 1974, his estate was initially appraised at only $55 million. Clearly, Hunt had succeeded in transferring most of his assets to his children before he died. However, because the centerpiece of the Hunt family fortune, Placid Oil Company, was a private company that did not issue reports to the public, it was impossible to estimate with any accuracy the total wealth of the Hunt family. The full extent of the Hunt family fortune was not revealed until six years later, when the family mortgaged most of its assets, including Placid Oil, in order to repay debts incurred by three family members in the silver futures market. Altogether, the family was able to pledge assets worth $3.2 billion as collateral for this loan. The fact that H. L. Hunt was able to transfer the bulk of his wealth to his children during his lifetime demonstrates some of the limitations of the present system of gift and estate taxes. Furthermore, the Hunts are hardly unique in this regard. Most of the wealthiest capitalist families in America have succeeded in perpetuating their fortunes over successive generations. In the case of the Hunt family, this feat of tax avoidance was accomplished largely through the use of a device known as a generation-skipping trust. In 1935, just before more progressive gift and estate taxes were due to take effect, H. L. Hunt created a series of trusts for his children. Over the years, he transferred most of his assets, including all of the stock in Placid Oil and a number of lucrative oil leases, to these trusts. Under the terms of the trusts, his six children were to receive all of the income produced by these assets during their lifetimes while the assets themselves were preserved for his grandchildren. Moreover, because his children do not legally own the assets held by these trusts, the Hunt grandchildren will eventually receive these assets without any estate taxes. In this way, Hunt safeguarded the bulk of his fortune from estate taxes for two generations. Moreover, generation- skipping trusts are but one of a number of tax-avoidance strategies employed by corporate rich families. Other strategies for circumventing or reducing gift and estate taxes include the use of lifetime gifts, family holding companies, and low-interest loans. Most of the other wealthy capitalist families in America, like the Rockefellers, du Ponts, Mellons, and Gettys, have used these and other tax-avoidance techniques to preserve their fortunes for several generations. FAMILY AND FORTUNE For most Americans, the notion of "family" corresponds to the sociological concept of the nuclear family consisting solely of parents and their children. Indeed, many Americans have only limited information about or contact with the members of their extended family, comprising such collateral relatives as aunts, uncles, and cousins. Sociologists have attributed this decline in the strength of such kinship ties to the fact that the extended family no longer performs very many important functions for individual family members. Although it has all but disappeared in much of modern American society, the extended family is a vital entity among the corporate rich. By and large, the members of these families are aware of their kinship ties to a large number of collateral relatives. Indeed, they may have occasional contact with many of them at family reunions, weddings, and funerals. There are many reasons for the survival of the extended family or kinship group among the corporate rich. The most important, of course, concerns wealth. In his classic study, America's Sixty Families, Ferdinand Lundberg declared unequivocally that "the family today, in no slighter degree than two or three centuries ago or in imperial Rome, is supreme in the governance of wealth-amassing it, standing watch over it, and keeping it intact from generation to generation." A somewhat less impassioned observer of the American upper class, E. Digby Baltzell, put it much more succinctly when he described wealth as the "fertilizer of family trees." The extended family persists among the corporate rich precisely because it still performs a number of vital functions for the members of these families. To begin with, kinship ties serve to delimit clearly which family members have a legitimate claim to part of the family fortune. Indeed, the primacy of the family in all matters pertaining to wealth is nowhere more evident than in the matter of inheritance. Of course, individuals who possess great wealth usually execute elaborate wills stipulating the exact distribution of their estates. For example, William Randolph Hearst, the newspaper magnate, left a will that was 125 pages in length. However, even when individuals with great wealth die without a valid will, their property and their progeny are protected by the rules governing intestate succession. Each state has laws that provide detailed directions for the distribution of estates among family members in the absence of a will. In general, these laws decree that an estate must be distributed to the spouse and children of the deceased. If there is none, then it typically reverts to his or her parents or siblings. Finally, if there are no surviving parents or siblings, then the estate is distributed among collateral relatives. The bizarre circumstances surrounding the estate of the reclusive billionaire, Howard R. Hughes, Jr., provide a case in point. Because he apparently died without a valid will and without a wife, children, surviving parents, or siblings, his estate was eventually distributed among twenty-one cousins. It did not matter that Hughes never knew most of the heirs to his estate. All that mattered to the courts were their claims to kinship. The inheritance of wealth provides an important economic basis for the maintenance of kinship ties among the corporate rich. Because most large fortunes are composed, at least initially, of stock in a single corporation, the members of a wealthy capitalist family often share a common financial fate. Although family members may eventually sell some of this stock and reinvest the proceeds in other securities, diversification may be delayed for many years in order to avoid unnecessary capital-gains taxes. Consequently, the members of these families are typically linked to one another for a long period of time because of their shared economic interests. Moreover, the members of corporate rich families are usually bound together by a number of legal arrangements designed to avoid gift and estate taxes. As George E. Marcus, an anthropologist concerned with inheritance, has observed, "the transference of wealth to descendants combined with the effort to conserve capital has required the internally motivated reproduction of the family in formal terms, through the use of such legal instruments as trusts, foundations, and holding companies." In other words, informal family ties are reinforced by formal legal arrangements. In many cases, family cohesion is also facilitated by the existence of a family office that handles the financial affairs of family members. For example, the twenty-three grandchildren of John D. Rockefeller, Jr., are inextricably linked to one another by a series of trusts, which hold most of the family fortune; by their common ownership of Rockefeller Group Inc., a family holding company for their real estate and broadcasting properties; and by a family office, Rockefeller Family Associates, which handles their personal finances. To some extent, the existence of elaborate legal arrangements involving trusts and holding companies has rendered the notion of individual wealth virtually obsolete. For all practical purposes, most family fortunes are owned by families and not by individuals. For example, J. Paul Getty was heralded by the press as a certifiable billionaire. After all, he held a majority of the stock in Getty Oil Company. He also received almost all of the dividend income from this stock, as much as $29 million a year. Despite the fact that this stock was worth at least $2 billion at the time of his death in 1976, J. Paul Getty was never really a billionaire. The reason, of course, is that most of the Getty Oil stock he controlled was not really his. Instead, he held roughly $1.3 billion of this stock as the sole trustee of a trust established by his mother. He voted all of the stock held by the trust and received virtually all of the dividends from it, but, in the eyes of the law at least, he did not own it. Indeed, J. Paul Getty and even his sons were only lifetime income beneficiaries of this trust: they were entitled to all of the income produced by the trust assets during their lifetimes, but they could not touch the principal. If the stock belonged to anyone, it ultimately belonged to the sixteen grandchildren of J. Paul Getty. According to the terms of the trust, however, they will not receive this stock until the trust is dissolved upon the death of the last income beneficiary. In view of the fact that J. Paul Getty, his sons, and his grandchildren all enjoyed benefits of one kind or another from this trust, its assets were, in some sense, the collective property of the entire family. Wealthy capitalist families usually possess more than mere fortunes; they also possess "symbolic family estates." In the words of one expert on kinship patterns in America, Bernard Farber, "symbolic estates derive from the fact that individuals inherit and accumulate not only property but relatives." For example, the great-grandchildren of John D. Rockefeller inherit not only part of the Rockefeller fortune but also a complex network of relationships with aunts, uncles, and cousins who are also Rockefellers. These social bonds between family members are reaffirmed during periodic family reunions as well as on such occasions as weddings and funerals. Family members usually strive to maintain their symbolic family estates primarily because they derive much of their social status as individuals from the social status accorded their family as a whole. For example, family ties are especially important whenever members of these wealthy capitalist families seek acceptance into the inner circles of the upper class. As E. Digby Baltzell observed in his book Philadelphia Gentlemen, "the upper class concept refers to a group of families, whose members are descendants of successful individuals." Moreover, the process of gaining unqualified membership in the upper class, through the accumulation and maintenance of an appropriate symbolic family estate, may require several decades. The grandchildren and great-grandchildren of John D. Rockefeller have gained acceptance into the most exclusive institutions of the American upper class, but it took the family almost two generations to overcome the stigma originally associated with the creation of its fortune. The importance of symbolic family estates is nowhere more evident than in the choice of names. It is common practice among the corporate rich to commemorate the founder of the family fortune by perpetuating his name in subsequent generations. Consequently, it is not unusual to find a namesake of the founder among his grandchildren or great-grandchildren. One result of this form of ancestor worship is the sometimes confusing use of generational numbers. The scions of some of the more prominent capitalist families include Harvey S. Firestone III, Robert W. Johnson IV, J. Paul Getty III, Richard J. Reynolds III, Eli Lilly III, Henry J. Kaiser III, and Clinton W. Murchison III, to name but a few. The record in this field may be held by Marshall Field VI, the great-great-great-grandson of the founder of the department store chain of the same name. Scions of wealthy families with dynastic names can, of course, ignore them when it suits their purposes. Two such scions who entered electoral politics, Senator John D. Rockefeller IV of West Virginia and Senator Henry J. Heinz III of Pennsylvania, prefer to be called "Jay" and "Jack," respectively, at least by their constituents. The maintenance of symbolic family estates through the use of family names sometimes occurs, albeit in somewhat modified form, even among the female descendants of a wealthy entrepreneur. In these cases, the children receive the maiden name of their mother as their middle name. Some of the more notable examples of this practice include Richard Mellon Scaife, Lammot du Pont Copeland, Arthur Ochs Sulzberger, Thomas Watson Buckner, and Edward Harriman Gerry. FAMILY AND FIRM The capitalist family, comprising a wealthy entrepreneur and his descendants, is something of an anachronism in the modern corporate economy. Of course, the entrepreneur himself is considered a heroic figure in the folklore of capitalism. After all, accepted economic theory argues that it is the entrepreneur, not the professional manager, who is the source of innovation in the capitalist economic system. However, even the most innovative and capable entrepreneurs eventually outlive their usefulness. In an economy dominated by large, bureaucratic corporations, the aging entrepreneur can sometimes become a serious threat to the prosperity and continued survival of the firm. The classic example of this pattern is, of course, Henry Ford. He is celebrated in American business history as the individual most responsible for perfecting the assembly-line method of production and for providing the public with reliable and affordable transportation. He was largely responsible for creating the Ford Motor Company and guiding it through a turbulent period of expansion to become one of the largest firms in the entire world. In his later years, however, Henry Ford almost succeeded in destroying the company he had built by refusing to change the design of his automobiles to meet the innovations introduced by his competitors. His intransigence undoubtedly cost the company much of its market share during a critical phase in the development of the automobile industry. More recently, Steven P. Jobs, one of the founders of Apple Computer Inc., left the company after the board of directors concluded that his autocratic behavior as chairman had jeopardized the profitability of the corporation. If the individual entrepreneur seems out of place within the large corporation, the position of his descendants is even more anomalous. The capitalist family that retains major stockholdings as well as positions of authority within an established corporation is often seen as an undesirable but unavoidable remnant of an earlier economic age. According to the tenets of conventional economic wisdom, all large corporations eventually succumb to a "managerial revolution" in which the actual control of the firm is quietly wrested from the founding family by professional managers. As a result of such a revolution, the descendants of the founder who still have major stockholdings in the firm are eventually relegated to the rather mundane task of collecting their dividends while the more important chore of managing the firm is left to others. The notion of a managerial revolution has a certain appeal, particularly to professional managers seeking to free themselves from the fetters of family control. However, the available evidence suggests that the managerial revolution may be one of the most protracted revolutions in history. There are still a number of large corporations that have descendants of their founders as their principal stockholders. Several studies have shown that roughly a quarter of the largest industrial corporations in America are subject to some form of family control. In most of these cases, family members also serve as officers or directors of the corporation. In light of this evidence, one noted researcher, Maurice Zeitlin, has concluded that the managerial revolution is nothing more than a plausible and convenient "pseudofact." In its simplest form, the notion of a managerial revolution implies that there is a separation of ownership and control in the large corporation. In other words, it is assumed that those individuals who own most of the stock in a corporation are no longer the individuals who control it. This theory is predicated on two patently questionable assumptions. To begin with, it assumes that there is a gradual dilution of family stock ownership as the firm issues new stock to the public in order to finance its expansion. It also assumes that the stock in the corporation held by the founding family is dispersed among a large number of family members, rendering the coordination of these stockholdings difficult at best. Presumably, the dilution and dispersion of family stockholdings serve to erode the power of the family and allow professional managers to assume effective control of the firm. The logic of this theory seems almost incontrovertible. Like most theories however, it does not always work in practice. Many corporations are able to finance their expansion largely from retained earnings or debt without the necessity of issuing additional stock to the public. At the same time, the stock in the corporation held by members of the founding family may be concentrated by an interwoven network of trust funds, holding companies, and. family offices. There are many firms in which the stockholdings of the founding family have been neither diluted nor dispersed to any great extent. As a result, many of these corporations are still controlled by members of their founding families. The inclination of corporate rich families to control or even manage their corporations for generations is not an act of mere perversity. In many cases, a wealthy capitalist family may have the vast bulk of its fortune invested in the stock of a single company. Consequently, family members may feel compelled to exercise some control over the firm simply to protect their investment. Although individual family members may gradually diversify their investment portfolios, tax considerations often dictate against such a strategy, at least in the short term. In all probability, the stock in the family corporation held by family members has appreciated greatly in value since they received it through gifts or inheritances. Whenever this stock is sold, the difference between the original cost of the stock and its present market value becomes subject to capital-gains taxes. For tax purposes, then, it is often advisable to defer any diversification until the stock in the family corporation has been revalued for tax purposes as the result of a transfer by gift or inheritance. In addition, the attachment of family members to the stock of the family corporation may be as much sentimental as financial. In many ways, the success of a wealthy capitalist family and the success of its firm are inextricably linked. Having risen from mere affluence to great wealth within a generation or two as a result of the appreciation in the market value of their stockholdings, family members may be understandably reluctant to sell all of their stock in the family corporation. Last but not least, family members may derive a great deal of power and prestige from the fact that their family controls a major corporation. It is not difficult to find many examples of firms in which the managerial revolution is more of an abstract theory than a concrete fact. One example is the Weyerhaeuser family and its long involvement with the Weyerhaeuser Company. The original Weyerhaeuser Timber Company was formed in 1900 by Frederick Weyerhaeuser, who served as its first president. In the years that followed, all four of his sons served as officers or directors of the company. Later, four grandsons also served as officers or directors. Largely as the result of acquisitions, the proportion of Weyerhaeuser Company stock held by members of the Weyerhaeuser family has declined from approximately 20 percent in 1937 to around 12 percent today. Inasmuch as this amount of Weyerhaeuser stock is worth in the neighborhood of $450 million, the family obviously has a sizable stake in the future of the company. George H. Weyerhaeuser, a great- grandson of the founder, is now president of the company, and a second cousin serves as a director. The Weyerhaeusers are not typical of all capitalist families, but they do serve to point out the obvious limitations of any theory positing an imminent managerial revolution. It is not all that unusual to find grandsons and even great-grandsons of wealthy entrepreneurs serving as officers or directors of some of the largest corporations in America. To the Weyerhaeusers, one may add such familiar family and company names as du Pont, Firestone, Ford, Dow, Heinz, Hearst, Coors, and Timken. In each of these cases, the founding family retains a substantial investment in the corporation. In short, a cursory review of the available evidence confirms that reports of the demise of family capitalism, even among the largest corporations, are somewhat premature. Most of the firms controlled by capitalist families may well be on the road to a managerial revolution, but such a revolution may be many years off. Family participation in the management and direction of a large corporation may, under certain circumstances, extend over a period of several decades. Even if family capitalism is on the decline among older corporations in mature industries, it appears to be on the rise among newer corporations. Some of the fastest growing and most profitable companies in America, many of them in burgeoning industries, are subject to some degree of control by their founding families. Drug companies such as Eli Lilly and Company, The Upjohn Company, Baxter Travenol Laboratories Inc., A.H. Robins Company Inc., and SmithKline Beckman Corporation have members of their founding families as major stockholders. Members of these same families often serve as officers and directors of these firms as well. The same can be said for electronics and computer companies such as Texas Instruments Inc., Hewlett-Packard Company, Motorola Inc., Intel Corporation, and Wang Laboratories Inc. In retailing, companies such as Dayton Hudson Corporation, Nordstrom Inc., The Limited Inc., Petrie Stores Corporation, and Wal-Mart Stores Inc. are controlled to some extent by members of their founding families. Last but not least, several major media companies, such as Knight- Ridder Inc., The Washington Post Company, The Times Mirror Company, Dow Jones and Company Inc., and The New York Times Company, are still subject to family control. --[cont]-- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, Omnia Bona Bonis, All My Relations. Adieu, Adios, Aloha. Amen. 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