-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 reference book. Om K ----- 10 Power and Privilege It is usually assumed that the wealthy are also powerful. To begin with, it is not unusual for the members of corporate rich families to exercise some degree of control over those corporations in which they are major stockholders. Indeed, family members often serve as officers and directors of those corporations. As a result, they exercise considerable economic power. However, economic power is not the same as political power. Despite a few notable exceptions, only a few scions of corporate rich families have ever been elected or appointed to political office. Nevertheless, economic power can be translated into certain forms of political power. For example, the members of wealthy capitalist families are typically among the major contributors to political campaigns. Of course, campaign contributions, even substantial ones, do not permit contributors to dictate the actions of elected officials. After all, most candidates for political office receive contributions, both large and small, from many individuals and organizations. As a general rule, however, elected officials who plan to seek reelection at some point generally try to avoid antagonizing those who have contributed or might someday contribute generously to their campaigns. In fact, candidates who seek large campaign contributions from the members of corporate rich families must typically demonstrate that their political goals and beliefs are consistent with the economic interests of those families and their corporations. In this way, the members of these families are able to influence the selection of candidates for political office. The corporate rich are powerful, but they are not omnipotent. There are definite limits to their power. After all, there are many examples of government actions that have not been entirely consistent with the economic interests of wealthy capitalist families and their corporations. The existence of formally progressive transfer taxes, for example, confirms that the corporate rich have been unable to prevent the passage of legislation that is clearly inimical to their interests. In this particular case, widespread popular sentiment in favor of the redistribution of wealth through the imposition of progressive taxes has simply overwhelmed the ability of the corporate rich to influence legislation. Although they have been unable to prevent the passage of progressive transfer taxes, the corporate rich have been able to introduce changes into these tax laws that have mitigated the effects of these taxes. Wealthy entrepreneurs and their descendants derive much of their political power from their campaign contributions, but they are able to influence the formation of public opinion and public policy in others ways as well. In fact, the corporate rich derive much of their political power from their control over major corporations and foundations. The ability of corporate rich families to control the major media corporations in America enables them to wield a subtle but pervasive influence on public opinion. Similarly, the ability of corporate rich families to control major foundations that, in turn, provide grants to policy-research institutions enables them to influence the formulation of public policy. DEEP POCKETS The relationship between wealth and power is especially apparent in the case of political campaign contributions. Corporate rich families are able to exert considerable political influence by virtue of the fact that they are usually among the largest contributors to political campaigns. Although a large contribution does not guarantee that a politician will invariably serve the interests of a particular contributor, such a contribution usually does ensure a contributor immediate access to that politician. For example, W. Clement Stone, the founder of Combined American Insurance Company and a major contributor to the Republican party in both 1968 and 1972, once claimed that he talked with President Nixon over the telephone about once a month. In a few cases, major contributors have actually sought specific forms of administrative or legislative relief in return for their contributions. In any event, campaign contributions are an important part of the candidate-selection process because candidates are not likely to win their elections unless they can raise sufficient campaign contributions. As a rule, individuals contribute money only to those candidates who share their political views. The members of corporate rich families typically contribute to candidates who share their opposition to government regulations that benefit either workers or consumers at the expense of corporate profits. Moreover, they are especially supportive of candidates who promise to reduce those taxes levied on wealthy capitalist families and their corporations. As one observer puts it, "a candidate is an extension of the political views of those from whom he receives money." The dependence of politicians on the members of corporate rich families for campaign contributions has a long and somewhat ignoble history in American politics. One of the first researchers to examine the relationship between wealthy contributors and elected officials was Ferdinand Lundberg. In his classic study America's Sixty Families, Lundberg concluded unequivocally that "it is an established fact that vast sums about which the general public seldom hears are used to prostitute virtually all elections." One of the first public investigations of political campaign contributions was conducted in 1912 by the Senate Privileges and Elections Committee. This investigation revealed that both political parties relied heavily on large contributions from major corporations and members of their founding families. In 1904, for example, the Republican National Committee received large contributions from such wealthy individuals as Edward H. Harriman, Mark A. Hanna, Henry C. Frick, T. Coleman du Pont, and Charles W. Post. The presidential nominee of the Republican party that year was Theodore Roosevelt. Although he publicly denounced the immorality of great wealth and the power of big business, President Roosevelt failed to mount any serious challenges to the privileges of the corporate rich or the power of the large corporations. Indeed, the actions that he initiated against a few corporations often served to obviate more radical challenges to the economic interests of the majority of corporate rich families and their corporations. In recent years, the enactment and enforcement of more stringent federal campaign disclosure laws have revealed the full extent of contributions by members of corporate rich families to both presidential and congressional campaigns. Using information from a variety of sources, Herbert Alexander, a noted political scientist, has identified the major contributors to every presidential election since 1960. In each of these elections, a significant proportion of all the money raised for political campaigns at the national level was contributed by a few hundred wealthy contributors. In 1960, for example, there were 95 individuals who contributed $10,000 or more to the major political parties and their candidates. These contributions accounted for just over 16 percent of the $9.5 million raised from all individuals by these parties and their candidates. By 1968, there were 424 individuals who contributed $10,000 or more to the major political parties and their candidates. In that year, contributions from these 424 contributors accounted for over 40 percent of the $29 million raised from all individuals by the major political parties and their candidates. In each of these elections, most of the large contributors were members of corporate rich families. Between 1960 and 1968, for example, 75 individuals who were members of either the Rockefeller, du Pont, or Mellon family contributed a total of $2.7 million to political campaigns at the national level. However, this total includes at least $1.5 million contributed to the unsuccessful presidential campaigns of Nelson Rockefeller by other members of the Rockefeller family between 1960 and 1968. The campaign contributions of the corporate rich to presidential campaigns have followed a consistent pattern over the past several decades. By and large, the members of wealthy capitalist families have directed the bulk of their contributions to the Republican party and its candidates. As a result of this largesse, Republican candidates have been better financed than their Democratic opponents. Although the corporate rich have contributed the vast bulk of their campaign funds to the Republican party in most presidential elections, they have not neglected the Democratic party entirely. As a rule, many of the wealthy contributors to the Democratic party over the years have been either Jews, Catholics, or Southerners. Of course, members of these groups have traditionally been Democrats. Moreover, even wealthy Jews, Catholics, and Southerners have often been excluded from elite positions by Protestant Northerners from established upper-class families. Moreover, incumbent presidents, even those who are Democrats, often receive generous campaign contributions from members of the corporate rich. For example, when President Roosevelt ran for reelection for the first time in 1936, he received large contributions from such scions of corporate rich families as Doris Duke Cromwell, Marjorie Post Davies, Joseph Medill Patterson, W. Averell Harriman, and Augustus A. Busch, Jr. Of course, his Republican opponent received substantially larger campaign contributions from several members of the Rockefeller, du Pont, Mellon, and Pew families. In many cases, those wealthy individuals who contributed to the Democratic party and its candidates were considered mavericks even by members of their own family. The ability of corporate rich families to influence political campaigns by means of their contributions to particular candidates and parties may have reached its peak in the presidential election of 1972. The presidential campaign that year, between Richard M. Nixon and George F. McGovern, was very expensive, and the corporate rich responded to the challenge with their customary largesse. In all, the 1,254 largest contributors that year gave $51.3 million to the major presidential candidates and their parties. Moreover, 284 individuals lent a total of $11.8 million to these campaigns. The Republican party and its candidate, who was also the incumbent president, collected far more from wealthy entrepreneurs and their families than the Democratic party and its candidate, who proposed more progressive gift and estate taxes. For example, the top 20 contributors to the Nixon campaign gave a total of just over $8 million. Much of this money went directly to the Committee to Re-Elect the President. Conversely, the top 20 contributors to the McGovern campaign gave a total of less than $3 million. Almost all of the largest contributors to the Nixon campaign, as well as many of the largest contributors to the McGovern campaign, were members of corporate rich families. Major contributors to the Nixon campaign included such wealthy entrepreneurs as W. Clement Stone, Daniel Terra, and Ray Kroc, as well as such scions of corporate rich families as Richard M. Scaife, Arthur K. Watson, and Walter Annenberg. Among the major contributors to the McGovern campaign were several liberal members of the corporate rich, including Stewart R. Mott, Max Palevsky, and Anne Labouisse Peretz. Many of the activities associated with the Watergate scandal, which eventually led to the resignation of President Nixon, were financed with illegal or misappropriated campaign contributions. In 1974, as a result of the disclosure of these financial abuses, Congress passed several amendments to the Federal Election Campaign Act. These and subsequent amendments established limits on the amount of money that individuals could contribute to any candidate for federal office. Specifically, these reforms prohibited individuals from contributing more than $1,000 to a candidate for each primary, runoff, or general election. Moreover, individuals were prohibited from contributing more than $5,000 to any political action committee or more than $20,000 to the national committee of any political party. In general, these reforms set an annual limit of $25,000 on individual contributions to candidates for federal office. However, because these limits apply to individuals, it is possible for a married couple to double these amounts. The Federal Election Campaign Act also limits the campaign expenditures of the candidates for federal office, including congressional candidates, and provides for some public financing of federal elections. These campaign-financing reforms have served to reduce the importance of large contributors to presidential and congressional campaigns. Nevertheless, wealthy contributors are still important, particularly in primary elections. For example, presidential candidates cannot continue to receive public funds unless they receive a sufficient proportion of the votes cast in the state primaries. Even the Federal Election Campaign Act has failed to sever the tie between wealth and power entirely. For example, as the result of recent court decisions, individuals are free to pay for advertisements on behalf of a candidate. The Supreme Court concluded that any limitations on individual expenditures advocating the election of a candidate represent an infringement of the constitutional right of free speech. Consequently, an individual is free to make independent expenditures on advertisements on behalf of a candidate as long as those expenditures are not coordinated with the candidate or any of his or her committees. One of the first major campaign contributors to exploit this ruling was Stewart R. Mott. One of the children of Charles S. Mott, a principal stockholder in General Motors, Stewart Mott has contributed generously to a number of moderate or liberal presidential candidates in recent years. Faced with the limitations on campaign contributions imposed by the Federal Election Campaign Act, Mott decided to use independent expenditures to influence the 1980 election. To begin with, he spent $90,000 on advertisements advocating the nomination of John Anderson, a moderate, as the presidential candidate of the Republican party. Later, he established his own direct-mail company, Mott Enterprises, which extended John Anderson, by then an independent presidential candidate, a $500,000 line of credit for direct-mail solicitations. As Mott later boasted, "I've figured out how to be a fat cat again." Another gap in the Federal Election Campaign Act involves political campaigns by the members of wealthy families. Under the present law, there is no limit to the amount individuals can spend on their own political campaigns. No family in American history has spent as much on politics as the Rockefeller family. The first member of the family to run for elected office was Nelson A. Rockefeller. In 1958, he defeated the incumbent governor of New York, W. Averell Harriman, who was also a scion of a corporate rich family. They both spent so much money on the campaign that newspapers referred to it as "the millionaires' sweepstakes." In all, he was elected governor of New York for four successive terms, longer than any other governor. He never hesitated to use his own money or money from other family members to finance his campaigns. Between 1958 and 1972, Nelson Rockefeller spent a total of $3 million of his own money on his four gubernatorial and three presidential campaigns. His family contributed another $14 million during that same period. It is not known how much his brother, Winthrop Rockefeller, spent on his four gubernatorial campaigns in the state of Arkansas. It may have been as much as $10 million. The biggest spender of them all, however, is undoubtedly John D. Rockefeller IV, the nephew of Nelson and Winthrop Rockefeller. After serving four years in the West Virginia state legislature, Jay Rockefeller decided to run for governor in 1970. He lost the election, but four years later he ran again. This time he spent over $11 million of his own money on the campaign and won. No one had ever spent so much money on a gubernatorial campaign in a state the size of West Virginia. In 1984, Jay Rockefeller decided to run for the Senate. He spent $12 million of his own money on the campaign and won. In all, Jay Rockefeller has spent well over $25 million of his own money on his political campaigns. In the past, only a few scions of corporate rich families have sought political office. There is the example of James M. Cox, the newspaper publisher and founder of Cox Enterprises, who served as governor of Ohio before he became the presidential candidate of the Democratic party in 1920. However, as political campaigns have become increasingly expensive, candidates who are wealthy enough to finance their own primary campaigns have enjoyed a distinct advantage over their opponents. Scions of wealthy families have generally sought the prestige and security of the Senate. For example, H. John Heinz III, whose great-grandfather founded the H. J. Heinz Company, was elected to the Senate from Pennsylvania in 1976. In all, he spent $2.6 million of his own money during the campaign. That same year, John C. Danforth, whose grandfather founded Ralston Purina, was elected to the Senate from Missouri. Although wealth typically provides a candidate with a distinct advantage, it is not always a decisive advantage. In 1982, Mark Dayton, a great-grandson of the founder of the Dayton Hudson Company, spent $6.7 million of his own money on his unsuccessful campaign for the Senate from Minnesota. During the campaign, Dayton referred to his wealth as his "original sin." However, eight other members of the Dayton family, who were apparently unrepentant about their wealth, contributed to his opponent. Other members of corporate rich families have pursued governorships. Pierre S. du Pont IV, whose family still controls E. I. du Pont de Nemours and Company, served as governor of Delaware for eight years. More recently, Lewis E. Lehrman, whose father founded RiteAid Corporation, spent $6 million of his own money on an unsuccessful campaign for governor of New York. MEDIA POWER The corporate rich exert a subtle but pervasive influence on the political agenda of the nation by their control over the news media. Over half of the newspapers in America, particularly those in major metropolitan areas, are owned by major media corporations. These same corporations also own most of the radio and television stations in the major metropolitan markets. Last but not least, most of the magazines and books sold in the country are published by these same corporations. Publishing and broadcasting have always been business enterprises. However, it is only in the last few decades that the ownership and control of these media have become concentrated in the hands of a few large corporations. Many of the major media corporations, such as The New York Times Company, The Washington Post Company, The Times Mirror Company, and the Tribune Company, had their origins as newspapers that served a single major city. These corporations now publish newspapers and operate radio and television stations in cities across the nation. Because media corporations have generally been able to finance their growth through retained earnings, they have been able to avoid diluting, to any great extent, the stockholdings of their founding families. As a result, most of the large media corporations in America are subject to some form of family control. Indeed, several corporate rich families, such as the Hearsts, Scrippses, Pultizers, Coxes, and Newhouses, own virtually all of the stock in major media corporations. In other cases, corporate rich families, such as the Grahams, Sulzbergers, Chandlers, Medills, Knights, and Gannetts, are major stockholders in publicly owned media corporations. The influence that the members of corporate rich families exert on the political affairs at the local, state, and national levels, through their control of major media corporations, is at once subtle but pervasive. Although newspapers cannot always determine the outcome of an election, even at the local level, they are able to influence public opinion about the various candidates for political office. To begin with, many newspapers publish formal endorsements of candidates for public office. However, the editorial endorsement of a newspaper can be less important than its news coverage. Newspapers can influence public opinion by the extent and nature of the coverage they provide to various candidates. Similarly, newspapers cannot determine the exact content of legislation, but they can influence public opinion about the urgency and necessity of any legislation. As a result of this pervasive political influence exercised by their newspapers, the members of those families that control major media corporations have almost immediate access to most elected officials. In this regard, individual newspapers undoubtedly have a greater influence on politics at the local and state levels than at the national level. The local political influence of newspapers stems from the fact that only a few of the very largest cities in America have more than one newspaper. Metropolitan newspapers have usually created local monopolies by acquiring competing newspapers in order to increase their profits. Newspapers that have local monopolies are generally more profitable than other newspapers because they can charge higher advertising rates. Certainly the most influential newspaper in America is The New York Times. Adolph Ochs acquired the struggling New York Times in 1896 and gradually transformed it into one of the most respected and profitable newspapers in the nation. Almost a century later, the newspaper is still under family control. lphigene Ochs Sulzberger, the daughter of the founder, and her children own 34 percent of the stock in The New York Times Company. However, because they own a majority of a special class of stock, they elect 70 percent of the directors of The New York Times Company. At present, Arthur 0. Sulzberger, a grandson of the founder, is the publisher of The New York Times and the chairman of The New York Times Company. In addition, the company publishes several magazines and several suburban newspapers and operates three metropolitan television stations. Given the political influence of The New York Times, elected officials have often gone to great lengths to remain on good terms with the newspaper and its owners. When Arthur H. Sulzberger, the husband of Iphigene Ochs Sulzberger, died in 1968, President-elect Nixon attended his memorial service. His gesture was widely interpreted as an attempt to restore amicable relations with The New York Times, even though he had earlier denounced the newspaper for its attacks on Spiro T. Agnew, his running mate in the presidential campaign. The New York Times is probably even more influential at the state and local levels than it is at the national level. In 1976, Arthur 0. Sulzberger endorsed Daniel P. Moynihan in his bid for the Senate. This endorsement by the most influential newspaper in the state of New York undoubtedly helped Moynihan win a very close election. One of the only other major metropolitan newspapers capable of influencing the political agenda on a national scale is The Washington Post. This newspaper is also controlled by members of its founding family. The Washington Post was acquired by Eugene Meyer, Jr., a successful financier, in 1933. Several years later, he transferred control of the newspaper to his son-in-law, Philip L. Graham. Over the last several decades, The Washington Post has espoused a number of liberal causes and has implicitly, if not explicitly, endorsed Democratic presidential candidates. However, the paper did endorse Dwight D. Eisenhower in his 1952 presidential campaign. In fact, Eugene Meyer was one of several influential publishers, most of whom were members of corporate rich families, who had earlier urged Eisenhower to seek the Republican nomination. Philip Graham was also active in presidential politics. In 1960, he helped convince John F. Kennedy to accept Lyndon B. Johnson as his running mate in the presidential campaign. At the Democratic convention, Graham actually carried messages back and forth between Kennedy and Johnson. At the same time, not coincidentally, The Washington Post ran a series of articles that suggested that Johnson was a logical running mate for Kennedy. The Washington Post Company, which owns several television stations, a number of suburban newspapers, and Newsweek magazine, is now run by Katharine Meyer Graham, the widow of Philip Graham and the daughter of Eugene Meyer. She and her four children currently own over 21 percent of the stock in The Washington Post Company. However, their stockholdings include all of a special class of common stock that elects a majority of the directors. The New York Times and The Washington Post are perhaps the most liberal of the major metropolitan newspapers in the country. Almost all of the other major metropolitan newspapers, particularly those controlled by corporate rich families, are much more conservative. One of the largest and most conservative of these newspapers is the Chicago Tribune. Joseph M. Medill acquired majority control of the Tribune Company in 1874. The newspaper was later run by a son- in-law and two of his grandsons. During its early history, the Chicago Tribune generally endorsed progressive Republican candidates and causes. However, the newspaper changed its editorial stance under the influence of Robert R. McCormick, a grandson of the founder. Despite the fact that he went to the Groton School with Franklin D. Roosevelt, McCormick denounced President Roosevelt and his policies. In 1948, the newspaper gained lasting fame for printing a headline that proclaimed that Thomas Dewey, the Republican presidential candidate, had defeated Harry Truman, the incumbent Democratic president. Even after Robert McCormick died in 1955, the newspaper continued to denounce successive Democratic presidential candidates as liberals or Communists. Just before the Democratic convention in 1968, the Chicago Tribune reported that Hubert Humphrey had been called "Pinkie" as a boy. Although no member of the Medill family is actively involved with the newspaper, family members still own about 49 percent of the stock in the Tribune Company. The Tribune Company also operates several television stations and publishes the New York Daily News. Although the Chicago Tribune no longer advocates reactionary policies, its editorial stance is still clearly conservative. Another major metropolitan newspaper, the Los Angeles Times, has been generally conservative in its political endorsements until relatively recently. Harry Chandler acquired control of the Los Angeles Times from his father-in-law around 1916. Since that time, a son and a grandson of Harry Chandler have served as publishers of the newspaper. For many years, the Los Angeles Times almost routinely endorsed conservative Republicans for both state and national offices. Indeed, the newspaper contributed significantly to the political careers of two conservative California politicians: Richard M. Nixon and Ronald Reagan. An endorsement from the Los Angeles Times, the largest newspaper in the state of California, undoubtedly helped Richard Nixon win election to the House of Representatives in 1946. Four years later, the newspaper endorsed him in his successful Senate race. Nixon was elected vice president two years later. Norman Chandler, a son of the founder and the publisher of the Los Angeles Times during that period, became a friend and informal political adviser to Richard Nixon. At the insistence of several members of the Chandler family, the Los Angeles Times later endorsed Ronald Reagan in his successful bid to become governor of California. Through a holding company and two massive trusts, the children and grandchildren of Harry Chandler still own about 33 percent of the stock in The Times Mirror Company. In addition to the Los Angeles Times, The Times Mirror Company operates seven television stations and publishes four metropolitan newspapers. It also owns several book and magazine publishers. A few media corporations are even more conservative than the Tribune Company or The Times Mirror Company. Many smaller media corporations, particularly those that publish daily and weekly newspapers in small cities throughout the nation, do not even attempt to conceal their conservative editorial positions. For example, Copley Newspapers, owned by the widow and three adopted children of James S. Copley, is one of the most conservative newspaper chains in the country. It publishes 41 newspapers across the country, most of them in small cities and suburbs. The company recently ran advertisements proclaiming religious fundamentalism as an editorial position for all of its newspapers. Perhaps the most conservative media corporation of them all is Freedom Newspapers Inc., founded in 1935 by Raymond C. Hoiles. Freedom Newspapers publishes 29 newspapers and operates four television stations, almost all of them in small cities. Harry H. Hoiles, the son of the founder, recently tried to buy the Freedom Newspapers stock owned by his sister and the children of his brother so he could gain control of the company. He was apparently distressed by the fact that the company had strayed even slightly from the conservative and libertarian precepts espoused by the founder. Among other things, the company had violated libertarian principles by establishing a pension plan for its employees. Corporate rich families that control private media corporations sometimes impose their political preferences on the editors of their newspapers. In 1972, for instance, President Nixon received endorsements from every one of the 43 newspapers owned by Cox Enterprises as well as every one of the 40 newspapers owned by the E. W. Scripps Company. --[cont]-- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, Omnia Bona Bonis, All My Relations. Adieu, Adios, Aloha. Amen. Roads End Kris DECLARATION & DISCLAIMER ========== CTRL is a discussion and informational exchange list. Proselyzting propagandic screeds are not allowed. Substance�not soapboxing! These are sordid matters and 'conspiracy theory', with its many half-truths, misdirections and outright frauds is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. 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