Dr. THORP. Thirty-seven million wage items, as it is technically called.

Mr. ARNOLD. Why are the railroads and public service enterprises omitted from the charts?

Dr. THORP. These are based on the Social Security records.

Dr. LUBIN. Is it not true, however, that if you did include the railroads, the concentration would be even greater at the right of your chart, because there are relatively few railroads, and something like 700,000 or a million workers?

Dr. THORP. Yes; agriculture would fall in over at this end of the chart, and the railroads would come in at this end of the chart.

Representative REECE. Do you have figures showing the distribution of employees and employers in some year prior to the depression from which we might draw a comparative relationship?

Dr. THORP. We have no such figures.

Representative REECE. Wouldn't that be rather interesting?

Dr. THORP. It would be very interesting. I don't know where one could get them. The best that one could do would be to study individual plants, and that is inaccurate, of course, because you need to know the degree to which plants are grouped into single enterprises. Representative REECE. I don't know that it would be possible, but were it possible to find from what class of concerns the nine, ten, or eleven million unemployed came from that would be very interesting. Mr. HENDERSON. That would be almost impossible.

Dr. THORP. I am told that is almost impossible to do.

Representative SUMNERS. Doctor, you made a statement this morning as to the large amounts of capital required to establish some of the new industries. Has any survey been made to determine how much capital it would require to establish a complete unit of production in those fields? I will illustrate what I mean. You mention one $11,000,000 plant. It might be that there would be probably 25 or 30, or maybe many units of production. Do I make myself clear?

Dr. THORP. Yes. It is true that many plants are organized on what might be called a battery basis.

Representative SUMNERS. That is what I am getting at. I don't believe, if I may speak for myself, and I think my colleagues would be interested, that any more valuable statistics could be furnished than those which would be provided with some notion of what the cost is for setting up a complete unit of production. It might be that these big amounts of money that are going into one investment wouldn't necessarily mean, under proper conditions, that a smaller amount might be used for the establishment of a unit that would turn out just as good material.

Dr. THORP. I think that is all very important to consider.

Senator KING. If I understand your inquiry, let me give an illustration and see if this falls within that category. A number of years ago and you are familiar, I think, with it-it was represented that by the expenditure of considerable money we could develop gold enterprises in Alaska.

Many of those who had gone there, adventurers and those in good faith, had failed because it needed so much for the cyanide process. and the flotation process and other technological developments. Finally an organization was formed and they spent $10,000,000, and needed all of that in order to test whether or not you could develop those gold properties. We lost every cent of it. Poor men had tried,

men with limited means, and they had utterly failed. It needed a large expenditure to develop technologically and scientifically, the machinery and the plants and processes essential for the reclaiming of the gold contents and the mineral contents. So many of the mining enterprises need considerable sums. It is all one enterprise.

SIZE OF ENTERPRISE MEASURED BY ASSETS

Dr. THORP. This question of capital leads right into the next measure that I want to introduce in connection with the size of corporations. There are a number of different ways in which one can measure size and the wage earner measure is only one of them.

If you measure in terms of wage earners, many enterprises which we think of as large ones would be small. The ordinary public utility, for example, has relatively few wage earners. It is very largely a capital using enterprise. Or to take the extreme case, a commercial bank has very few employees relative to its capital and its assets.

Now I wish to discuss the problem of size with some evidence as to the size of assets. There are a group of charts which I will now present based on the data from the Bureau of Internal Revenue.

The first chart presents the size of corporations by assets in 1935. This is a chart based on all corporations which filed balance sheets with the Treasury Department; that is, about 85 percent of all active corporations in 1935 filed balance sheets but these corporations accounted for at least 98 percent of all compiled receipts. The total was in the neighborhood of 415,000 corporations.

(The chart referred to was marked "Exhibit No. 57" and appears on this page. The statistical data on which this chart is based are included in the appendix on p. 229.)

Dr. THORP. Keep in mind that this record is entirely a record of corporations. The Social Security data on wage earners included all types and forms of enterprise.

The figures aren't exactly comparable, but just to remind you, you may remember that this morning I pointed out that between 60 and 65 percent of all our national activity was done by corporations, so that to some extent we have to realize that there are assets which do not appear here.

Of course, those enterprises which are not included would all of them be added primarily to the small enterprise group; that is, there are very few large individual proprietorships or partnerships when measured in terms of assets.

One or two other points with regard to these charts that I should like to point out follow: When we measure in terms of assets, we run into all the difficulties in the field of accounting. We have the problem of valuation of these assets, and the inclusion of depreciation or depletion. The financial figures are therefore subject to the practices of the individual corporation, in preparing its records for filing with the Treasury.

Also, it is important to realize that in 1935 all corporations, except affiliated groups of railroad corporations, filed separate returns, so that subsidiaries will appear in this record as separate corporations. That is a bias entirely in terms of understating the amount of consolidation. To the degree to which it were possible to group these corporations as they economically are grouped, we would then get more concentration. Now what does the record show? This is perhaps not as significant as the next chart which I am going to give, because this includes financial enterprises, and assets as held by banks, for example, are rather different from assets held by a department store or by a manufacturing enterprise. However, these are all enterprises and here we get a picture of all assets-and remember assets means equipment, plant, stocks of goods on hand and accounts receivable and the like. In 1935, 55 percent of all corporations had assets of less than $50,000 and they had 1.4 percent of the assets of all corporations.

At the other extreme, we get about 780 cases with $50,000,000 of assets and over. That is two-tenths of 1 percent of all corporations, and they had about 52 percent of the assets. A little more than half of the corporations had assets under $50,000 and a little more than half the assets were in the hands of corporations with assets of over $50,000,000. It is a picture in which one finds a smaller percentage of the corporations in each larger asset group and an increasing amount of assets.

EXCLUSION OF FINANCIAL COMPANIES

Dr. THORP. This chart is somewhat deceptive because it includes these financial corporations, and so we have had the same chart prepared excluding all these financial companies.

(The chart referred to was marked "Exhibit No. 58" and appears on p. 105. The statistical data on which this chart is based are included in the appendix on p. 230.)

Dr. THORP. That changes the picture slightly. It changes it to show moderately less concentration because the assets held by financial companies are especially concentrated.

Senator KING. Pardon me, would either of these charts show the insurance companies?

Dr. THORP. Yes; the insurance companies would be in this "Exhibit No. 57." They are included among the financial institutions. They would be excluded from "Exhibit No. 58."

Senator KING. And would you take into account in determining the assets of insurance companies the liability which grows out of the fact that they have outstanding policies amounting to more than 68 billion, with obligations of more than 102 billion dollars?

Dr. THORP. No; the assets are not net assets. Even the manufacturing company may have bond issues outstanding which represent claims against the assets. These are the gross assets as shown on the balance sheets, and someone, if you include the stockholders, has a claim to all those assets.

Senator KING. Of course, there are stockholders in all those corporations, more than 18,000,000 are there not?

Dr. THORP. I don't know the figure.

Senator KING. That is what Berle and Means and other statisticians estimate.

2

Mr. DAVIS. May I ask a question? Referring to the exhibit giving size of corporations by assets,' and the exhibit giving the employers and employees, you explained that about half of the total employees were employed by corporations employing less than 250 each, and the other half of those employing more than 250 each. Have you any figures giving the relative size in assets of the corporations in the two groups?

Exhibit No. 57, supra, p. 103.
Exbibit No. 56, supra, p. 97.

Dr. THORP. We have absolutely no figures that permit you to get across from wage earner concentration to assets concentration. I tried to see if we could work out any such comparison and the difficulty is that it was impossible in the length of time that I had to break down the Treasury tabulations to correspond with the coverage of Social Security.

For example, the Treasury records put the railroads and the public utilities together in their size classification. Well, now, the public utilities are under Social Security and the railroads are not, and therefore I was not able to make a cross-tabulation. I am quite certain that in working with the Treasury it would be possible to get some such calculation worked out.

Mr. DAVIS. It seems to me it would be quite illuminative if we could know the employment given with the investment of the two classes. Dr. THORP. I think it is possible to make such a calculation.

ASSETS DISTRIBUTION FOR TYPES OF ECONOMIC ACTIVITY

Dr. THORP. In exhibit No. 59 we begin to examine this picture in terms of various subdivisions within our economic structure.

(The charts referred to were marked "Exhibits Nos. 59 and 60" and appear on pp. 106 and 107. The statistical data on which these charts are based are included in the appendix on pp. 230 and 231.)

EXHIBIT No. 59

AND

ASSETS OF LARGE CORPORATIONS-$5,000,000 OVER

PERCENT OF INDUSTRY TOTAL IN 1935

Dr. THORP. In this case we have had to define large corporations as those having $5,000,000 in assets and over.

Senator KING. $5,000,000?

Dr. THORP. $5,000,000 in assets and over.

The groups are arranged in order. In transportation and other lic utilities you get the greatest concentration of assets, and service,