9

p A characteristic feature of US economic development in the 1960s was continued concentration of economic power in the hands of the monopolies. The power of giant corporations grew steadily: by the end of the Second World War there were 43 billionaire corporations in the USA, and 93 in 1959, whereas by 1962, the total number of companies ( banking, insurance, industrial, transportation, etc.) with assets of over $1,000 million amounted to 116, in 1965—149, in 1967—194, and in 1970—252.  [9•1 

p Increased concentration and centralisation of capital over recent years has resulted in a new and significant growth in the power of the big banking monopolies. In 1967, there were about 14,000 commercial banks in the USA, with total assets of $452,300 million. At the same time, the 50 largest banks had assets of $186,600 million; in other words, less than 0.4 per cent of the banks controlled over 40 per cent of the country’s total commercial banking assets. Furthermore, the aggregate assets of the five leading US banks comprised $74,800 million, or two-fifths of the assets of the 50 biggest banks.  [9•2 

Figures published annually in Fortune magazine illustrate 10 the rapid growth in these five banks’ concentration of capital in recent years:  [10•1 

The Biggest Banks Assets (in million dollars) 1960 1970 Bank of America 11,941 9,200 8,832 4,539 4,423 29,740 24,526 25,835 10,979 12,112 Chase Manhattan Bank First National City Bank Chemical New York Corp Morgan Guaranty Trust Co.

p A small group of banks not only dominates the country’s entire financial life, but also controls an ever greater part of the giant US corporations. Findings of the House Banking and Currency Committee show that most of the country’s large corporations are controlled by 15 banks having a total of $113,000 million in assets. First National Bank of Chicago owns over 5 per cent of the shares in 401 companies; Chemical Bank New York Trust has representatives on the boards of directors of 278 companies; and Morgan Guaranty Trust owns from 5 per cent to 20 per cent of the shares in all the leading copper producing companies except Anaconda.  [10•2 

p Concentration of capital in American industry also reached an exceptionally high level in the 1960s. According to official figures, in 1964, 1,758 corporations with assets of $100 million or over owned 58.5 per cent of the capital, or assets, of all registered active corporations in all branches of the economy.  [10•3 

p The high degree of concentration of capital in the US manufacturing industry can be seen from data computed by University of Wisconsin Economics Professor Willard Mueller. In 1970, the 102 largest corporations (with assets of $1,000 million or over) of the 198,000 in this sector held 48 per cent of the overall total assets; 609 (with assets of 11 $100 million or over) held 76 per cent of the total assets; and 2,500 owned 88 per cent.  [11•1  The manufacturing sector may also be used as an example showing the rate at which the concentration of capital in US industry proceeded after the Second World War. In 1948, the 200 largest corporations in this field owned about 48 per cent of the total assets, while in 1967, they owned 59 per cent.  [11•2 

p The trend toward continued increase in the concentration of production is no less apparent. In 1947, the 200 biggest companies’ share of newly created value in the manufacturing sector was 30 per cent; in 1958 it was 38 per cent and in 1963—41 per cent.  [11•3  The US Department of Commerce estimates show that if concentration continues at this rate, these 200 companies will in the next few years be producing one half the output of the manufacturing sector.

p A few big corporations in each of the major US industries are the basic producers of a given kind of product. Thus, entire industries—such as automobile manufacturing, aircraft manufacturing, copper refining, production of aluminium, tin and tin plate, electrical equipment, agricultural machinery, office equipment, alcoholic beverages, etc.—are often controlled by three or four giant corporations. For example, General Motors, Ford and Chrysler make 95 per cent of all new automobiles produced in the country. ALCOA, Reynolds Metals and Kaiser Aluminium and Chemical control nearly 90 per cent of the aluminium market; US Steel, Bethlehem Steel and Republic Steel put out about 60 per cent of the country’s steel, and Anaconda, Kennecott Copper, American Smelting and Refining and Phelps Dodge produce virtually all of the country’s refined copper.  [11•4 

p The big US companies have grabbed key positions not only in the economy of their own country, but in the entire world capitalist system. Of the 457 monopolies in the capitalist world with a turnover of over $250 million, 272, or 60 per cent, are American. The top three in volume of capital are US companies: General Motors, Standard Oil of 12 New Jersey and Ford Motor, in that order. As for the top positions in specific industries, the big three from the US head the list in automobile manufacturing; the dominating positions in the electrical engineering and electronics fields are held by General Electric, International Business Machines and Western Electric; US Steel is in first place in the ferrous metal industry; the largest in the chemical and the oil industry are E. I. Du Pont de Nemours and Standard Oil of New Jersey, in that order; and the world leader in meat processing is also a US monopoly—Swift.  [12•1  The biggest US monopolies, according to data compiled by US economist Richard J. Barber, produce more than the corresponding industries of any West European country, and their aggregate turnover exceeds the gross national product of several West European countries put together. General Motors, for example, writes Barber, which employs 700,000 foreign and American workers, has hundreds of suppliers, plants in practically every state and equipment in twenty-four foreign countries, is virtually—except for certain formal signs—a State in itself.  [12•2  The gross national product of this “State” is greater than that of such countries as Argentina, Belgium, Switzerland, Denmark or Venezuela.  [12•3 

p Holding the key strategic positions in today’s US economy, the biggest corporations and banks have in turn formed super-powerful financial and industrial empires that are controlled by several billionaire families. The multimillionaire Rockefeller family, for example, plays the decisive role in an empire consisting of nine banks and insurance companies, including such giants as Chase Manhattan Bank, Metropolitan Life Insurance and Equitable Life Assurance; six big oil companies, including Standard Oil of New Jersey; two railway and one aircraft companies. The empire also includes such giant corporations as Westinghouse Electric, Borden, American Sugar Refining, American Telephone and Telegraph and many others. The total assets of this financial and industrial group are estimated at $63,000 million.

13

p The increasing concentration of capital and of production and the unprecedented growth of a few hundred corporations’ monopoly power takes place under conditions of a fierce competitive struggle. Every year, thousands of small and, frequently, middle-sized and large companies, unable to withstand the onslaught of the giant corporations, are ruined, broken up and absorbed by bigger companies. As noted in the New Programme of the Communist Party of the USA: "Monopoly exacts its toll from small business and even from the larger non-monopoly capitalists. Using its superior economic resources in ruthless competition, employing its control over credits and prices, obtaining favours from government at the expense of small business, monopoly capital drives thousands of small and not-so-small businesses to bankruptcy and menaces the existence of others.”  [13•1 

p Concentration of capital and centralisation of production are furthered to a large extent by the accelerated introduction of new machines and techniques into production. Technological progress, and particularly advances in the field of automation, all of which the big monopolies are able to apply in their operations, lend even greater impetus to the process wherein small and .middle-sized companies, unable to compete with the monopolies, go under or are absorbed. It is no accident that the number of company mergers and absorptions, especially in sectors with a high level of automation, went up sharply since the mid-1950s, that is, since the beginning of a period of relatively wider use of cybernetics, electronic computers and automatic control systems in the economy.

p Federal Trade Commission figures show that in 1950 there were 219 mergers in the manufacturing and extractive industries. The number grew to 844 in 1960, to about 1,000 in 1966 and exceeded 2,400 in 1968  [13•2 . In the ten-year period between 1955 and 1965, each of the 500 largest corporations on Fortune magazine’s list (with the exception of 14) absorbed over 100 other companies.  [13•3  It should be borne in mind, 14 however, that this did not always involve only small companies. In the period from 1962 through 1969, for example, 110 of the 500 biggest corporations on the Fortune list disappeared as a result of mergers. In 1968 alone, 26 of the largest 500 corporations were taken over by others.  [14•1 

p The fate of Spencer Chemical—which had assets of $106 million and was one of the 500 giant US corporations—may serve as an illustration of the present trend in the concentration of capital through absorptions and mergers. In 1962, Spencer Chemical absorbed twelve smaller companies, but a year later, it merged with Gulf Oil, the eighth largest corporation in the United States, with assets of $4,200 million.  [14•2  Numerous examples of this kind clearly illustrate Lenin’s conclusion that the old struggle between small and big capital is being resumed at a new and immeasurably higher stage when big companies fall into the same category as small ones.  [14•3 

p The basic trend now, as the rate of concentration of capital continues to increase, is the formation of conglomerate corporations. These giant diversified amalgamations arise as a result of mergers involving companies with no rational production ties between themselves and producing unrelated products. In 1968, over 90 per cent of the mergers of large companies (with assets exceeding $10 million) gave rise to conglomerates composed of completely heterogeneous companies.  [14•4 

Among the most characteristic conglomerates is International Telephone and Telegraph, which runs the telephone system in 123 countries and at the same time rents automobiles, publishes books, builds houses, bakes bread, operates hotels and motels, etc.  [14•5  Another corporation, Textron, which originally manufactured only synthetic and woollen fabrics, now has 27 branches and 113 factories which put out helicopters, chicken feed, saws, fibre-glass boats, bathroom fixtures, lawn mowers, linseed oil and dozens of other kinds of 15 goods.  [15•1  The following table shows how rapidly the assets of these conglomerates grow.  [15•2 

Assets (in million dollars) ( ’oinpHiiy I’.ifi/i 1SMJ5 IDlid 19«7 1W1K International Telephone & Telegraph 1 542 1 783 2 121 2 761 4 067* Ling- Tenico - V ought 323 336 468 1 833 2 770 Litton ............. 086 916 1 172 1 562 1 855 Textron 720 851 1 132 1 446 1 704 Gulf & Western Industries . . . 117 182 317 644 1,314 * In 1969, International Telephone & Telegraph absorbed the large Hartford Fire Insurance Company, as a result of which IT&T’s assets swelled by 50 per cent, going over $6,000 million. (Time, October 31, 1969, p. 54.)

p The mergers that took place in the 1960s and especially the creation of conglomerates accelerated the rate of centralisation of capital and increased the economic and political influence of a handful of monopolies on the country’s destiny even more. It is noteworthy that in late 1968, even President Johnson’s Cabinet Committee on Price Stability had to admit that the wave of mergers was leading to such a centralisation of economic power that the "competitive, free enterprise economy" could end up being seriously undermined, and that the mergers could "threaten traditional American social and political values".  [15•3  Fortune, a magazine for American business circles, has predicted that if the trend in mergers and concentration continues to develop at the same rapid rate, small and middle independent companies will disappear in a matter of ten years, leaving but 200 big companies, all of which will be conglomerates.

p As it amasses power and gains control over broad sectors of the American economy, the monopoly oligarchy rakes in fabulous profits. According to American sources, the top 500 US companies showed an increase of 86 per cent in clear profit during the period from 1960 through 1967, as 16 compared with a total increase in profits (after taxes) of 80 per cent by all companies over the same period.  [16•1  Fortune magazine has computed that the profits of these 500 companies accounted for 73.7 per cent of the profits of all American companies in 1969, and 74.8 per cent in 1970.  [16•2  Moreover, the profits of ten giant monopolies amounted to $6,500 million, or over 30 per cent of the profits of the 500 leading corporations.  [16•3 

p Such monopoly giants as General Motors, Standard Oil of New Jersey, American Telephone & Telegraph, General Electric, Ford Motor, Texaco, International Business Machines, Sacony Mobil Oil and others continually make record profits. American Telephone & Telegraph, for example, nets clear profits exceeding the revenues of 13 of the United states put together. Other big US corporations are not far behind.

p It should be noted that profit figures usually do not include the large incomes of corporation officials—the top managers. According to official figures for 1962, of the total number of managers working for the 19 largest American companies, six received annual salaries of over $500,000 each, 12 got from $375,000 to $500,000, and 28 made from $250,000 to $375,000. Fifty-six managers and top administrators of General Motors received a total of $15.7 million in salaries and bonusesthai is, more than the aggregate annual salaries of 606 of the highest paid government officials. In 1969, as a further example, Chairman of the Board of Directors of General Motors Corporation James M. Roche received $790,000 in the form of salary and other remuneration; Chairman of the Board of Directors of Ford Motor, multimillionaire Henry Ford received $515,000 (in addition to $3 million received in dividends); and the average annual income of Chairman of the Board of Directors of Chrysler Corporation Lynn Townsend between 1963 and 1969 amounted to $429,000.  [16•4 

17

p As monopoly capital continues to increase its economic might and rake in fabulous profits, it makes every effort to conceal its exploiting role in the society and its undivided power over the country’s corporations. One theory in vogue and designed to satisfy modern capitalism’s acute need for protective camouflage is the theory of so-called people’s capitalism. The essence of the theory boils down to saying that as capitalism develops, property becomes “democratised”, that ownership of the means of production increasingly passes into the hands of millions of stockholders—workers and other wage earners—and that they, that is, these stockholders, are owners just as much as the capitalists themselves.

p Just how unconvincing and far from the truth such pseudo-scientific allegations are can be seen from the caustic criticism levelled at them not only by Left-wing organisations and the labour unions, but by a good number of bourgeois writers. The myth about the “democratisation” of property and about the transformation of small and middle stockholders into "co-owners of corporations" has been exploded more than once by data published in the American press. It has been pointed out, for example, that although 17 million people were stockholders in early 1960s, 98.4 per cent of them, or 16,725,000 people, owned only 20 per cent of the total number of shares, while a small group of less than 275,000 people, or 1.6 per cent of all stockholders, controlled 80 per cent of all existing shares, valued at $320,000 million.  [17•1 

p A thorough analysis of statistical data on the distribution of share capital among the various categories of stockholders enabled well-known American economist Ferdinand Lundberg to conclude that practically all companies—big, middle and small—are controlled by a few powerful families. It is apparent, writes Lundberg, "... that from two to three up to twenty of the largest stockholders own very large to total percentage of the companies”, and that "concentration of ownership and control in a few hands is a built-in feature of the American economy".  [17•2 

p This small group of real owners of share capital need 18 possess only a ten per cent block of shares, and in many cases even less, in order to effect control over a bank or corporation. Multimillionaire Richard Mellon, for example, requires only 2.98 per cent of the ALCOA stock to maintain effective control of that aluminium company, and 1.78 per cent of the stock to control Gulf Oil.  [18•1 

p As for how much the working people of America participate in share capital, figures for 1965 show that the aggregate share of workers and farmers among all stockholders did not exceed 3 per cent.  [18•2  This, then, is what the economic “partnership” between labour and capital under what the apologists of capitalism called "people’s capitalism" really looks like.

p The growing concentration of capital and production and the continuing increase in power of the monopolies took place with the active assistance of the Democratic Administration, whose domestic policy was directed toward broadening the sphere of government regulation in the economy and reflected the further development of state-monopoly capitalism. "With the direct help of the government,” Gus Hall noted at the 18th National Convention of the Communist Party of the USA, "there is taking place an unprecedented polarisation of wealth and monopoly control of finance and industry. With the direct intervention of the government our country’s economic life is being totally directed into channels that serve the profit interests of the top money lords. State power is increasingly a direct economic factor, a powerful instrument for guaranteeing maximum profits to the biggest monopolies at the expense of the workers, the Negro, Puerto Rican and Mexican-American peoples, the small farmers and small businessmen.”  [18•3 

p Government measures during both Democratic and Republican administrations undertaken in accordance with recommendations coming directly from monopoly groups 19 have been aimed at ensuring additional privileges to big capital. Sonic of the major steps taken were to increase equipment depreciation allowances, reduce corporate taxes, establish a “partnership” in the fields of atomic energy and space communications, provide for subsidies and grants to various companies, grant billion dollar subsidies to large farmer-capitalists to support prices on agricultural products, etc.

p The basic channel through which, with government help, unprecedented profits flow to the leading monopolies is that of defence orders, made against a background of an unrestrained arms race and the militarisation of the entire American society. As pointed out in the Programme of the CPSU, "state-monopoly capitalism stimulates militarism to an unheard-of degree. The imperialist countries maintain immense armed forces even in peacetime. Military expenditures devour an ever-growing portion of the state budgets. The imperialist countries are turning into militaristic, military-police states. Militarisation pervades the life of bourgeois society.”  [19•1  This characterisation of the imperialist states is especially applicable to the USA, where the government’s involvement in the country’s economy is predominantly of a militaristic nature.

p The post-war period saw a steady growth in the militarisation of the US economy through which monopoly capital strove to strengthen the capitalist economic system and guarantee high profits for itself. In recent years, the growing power of giant military-industrial corporations and their enormous influence not only on the economic but also on the political life of the country have assumed such dangerous proportions that even some spokesmen of the ruling circles have been forced to voice their anxiety.

p Notable in this connection was former President Dwight Eisenhower’s statement made on nationwide television on January 17, 1961, that "American democracy" was being threatened by a new enormous force—the military-industrial complex. "The total influence—" Eisenhower said, " economic, political, even spiritual—is felt in every city, every state house, every office of the federal government. . .. We must guard against the acquisition of unwarranted influence, 20 whether sought or unsought, by the military-industrial complex. . . ."  [20•1  This statement by a former president and general and obedient servant of big business shows how far the merger of government and monopoly power has gone and how deeply militarism has entrenched itself in the country.

The power and influence of the American military- industrial complex steadily increased in the 1960s, as evidenced by statistics on direct military spending.  [20•2 

Fiscal Year Direct Defence Spending (million dollars) 1961 47,383 1962 51,097 1963 52,257 1964 53,591 1965 49,578 1966 56,785 1967 70,081 1968 80,516 1969 81,240 1970 (est.) 79,432

p As can be seen from the table above, the US Department of Defence budget has shown a sharp increase in recent years. But it should be borne in mind that the government does not include in the category of "defence spending" any appropriation for the needs of the Atomic Energy Commission or the space programme, which are of a sharply expressed military character. If we take these portions of the budget for the 1970 fiscal year into account, the total sum allotted for military purposes and for programmes connected with them amounted to $84,300 million (approximately 43 per cent of the expenditure part of the federal budget).

p The US military machine has grown to gigantic proportions. In 1961, material property at the Pentagon’s disposal was valued at $164,800 million; by 1970, this figure had reached $200,000 million, which amounted to over one half of all US Government property both within and outside the country.  [20•3  Land placed at the disposal of the US Defence Department exceeds the combined areas of the states of Rhode 21 Island, Delaware, Connecticut, New Jersey, Massachusetts, Maryland, Vermont and New Hampshire. The Pentagon purchases almost 15 per cent of the industrial goods produced in the USA. The US Government buys for “defence” needs the greater part of the country’s output of missiles, communications equipment, electronic and other instruments and devices, ships, etc.

p The 1960s were unprecedented boom years for corporations specialising in armaments production. Government armaments contracts almost doubled between 1960 and 1969 (from $22,500 million to $42,300 million),  [21•1  with the lion’s share of defence orders going to a small group of the bigger corporations. The Pentagon annually concludes about 2,500,000 contracts with about 18,000 American corporations. About one-third of these, as a rule, fall into the hands of the ten leading armaments monopolies.  [21•2 

p The extent to which defence orders are profitable for the monopolies can be seen from the fact that for many years the average rate of profit of the 15 corporations, which according to Defence Department figures are the basic producers of military goods for the government, substantially exceeded the rate of profit of the country’s 500 largest industrial corporations.  [21•3  In 1968, for example, the profits of the arms suppliers were approximately 70 per cent higher than the average profits of other types of companies.  [21•4  Between 1964 and 1966, according to figures compiled by progressive American economist Victor Perlo, industrial corporation profits showed an increase of $10,000 million, or 25.8 per cent, while the profits of industries producing for the war in Vietnam during that same period went up by 56 to 176 per cent.  [21•5  An official government study of Defence 22 Department contracts with 146 firms showed that some of the companies involved, particularly those filling orders for ammunition and aircraft and missile equipment (for the war in Vietnam) made profits as high as 240 per cent.  [22•1 

p Heading the list of corporations getting fat on the dirty war against the people of Vietnam is General Dynamics. In the fiscal year of 1968 it received orders totalling $2,239 million for the production of military aircraft, atomic assault submarines, various kinds of missiles and other armaments for the US armed forces; in 1964, it had contracts amounting to a total of $1,455 million.  [22•2 

p Number two on the list is Lockheed Aircraft, whose orders for fighter aircraft, jet cargo planes, missiles, warships and other armaments amounted to $1,870 million in 1968, or $883 million more than in 1964.  [22•3 

p Along with the corporations specialising in armaments, many other monopolies that had formerly operated almost exclusively in the sphere of civilian production have also cashed in on the arms race programme and particularly on the war in Vietnam. Thus, the country’s biggest corporation, American Telephone and Telegraph, recorded $776 million worth of orders in 1968, taking sixth place among the corporations filling Pentagon orders; Textron’s orders amounted to $501 million, and Ford Motor’s—$381 million.  [22•4 

p Escalation of the war in Vietnam and increased military spending was accompanied by a marked reduction in budget allocations for civilian needs. As it sought additional money for military needs, the US Government annually reduced the federal budget allocations for public health, education, social welfare, transportation, etc., economising primarily by cutting appropriations for social programmes designed to alleviate the situation of the working people.

p The unrestrained increase in military spending accelerates the further strengthening of the monopolies’ positions and enhances their power and control over the country’s entire economic and political life. At the same time, the arms race 23 ultimately has a negative effect on the overall condition of the economy as it gives rise to inflation, devaluation of the dollar, a higher and higher cost of living, a dangerous increase in the national debt and a balance of payments deficit.

The militaristic fever which has been consuming enormous resources impinges above all on the interests of the working people and exposes the demagogy of the high-sounding social programmes that have been announced to the American people by their government in recent years. As a consequence, noted the well-known American columnist, Walter Lippmann, social contradictions have come to the fore all the more noticeably and conflicts between labour and capital have become aggravated, "The surpluses of an expanding economy,” Lippmann said, "have been swallowed up and this has removed the lubricants and the cushions against the conflicts of the interests and the rivalry of ideologies. We are moving more and more into sharp and raw confrontations. This is the tragic consequence of one of the most serious miscalculations in our history.”  [23•1