Book 1 — CHAPTER VI THE MONOPOLY OF CAPITAL

IN view of the facts as to rich and poor estates which we examined in Chapter 4, it is obvious that to state that the accumulated wealth of the United Kingdom probably amounts to £300 per head of the population, or £1,500 per family of five persons, is to mask in averages a great inequality of distribution.

Reverting to the Death Duty records, it is possible, by means of them, to give a true idea of the manner of distribution amongst our people of the greater part of the nearly £14,000,000,000 of capital.

I again direct attention to the tables on pages 52 and 53. Year after year, with extraordinary constancy, a certain amount of money passes in each class of estate. So small are the variations in relation to the magnitude of the totals that it is hardly necessary to average the five years in working at the figures.

If about 65,000 persons die every year leaving about £279,000,000, what is the ratio to these figures of the numbers and property of the living?

The question thus raised is an exceedingly interesting one. Porter in his "Progress of the Nation" seems to have assumed a ratio of 45 to 1, but I do not think that the true figure can be so high as this.

The British Crown, since Queen Anne, has passed at the following dates:

Anne,1702

George I.,1714

George II.,1727

George III.,1760

George IV.,1820

William IV.,1830

Victoria,1837

Edward VII.,1901

George V.,1910

Thus, in 208 years, the Crown has passed eight times, or, on the average, once in about 26 years.

I have investigated the dates at which a considerable number of well-known estates have passed at death during two centuries and have found the most remarkable variations in different families. The Earldom of Suffolk has passed at average intervals of 16.7 years between 1731 and 1898. The Earldom of Coventry has passed at intervals of 22 years between 1712 and 1843. These are intervals which are well under the average, while above the mean are cases quite as remarkable. The Earldom of Essex, between 1709 and 1892, has passed only four times, giving an average of 45.7 years. The Earldom of Bathurst, again, between 1775 and 1892, passed only five times, giving an average of 43.4 years.

Taking the mean of a large number of actual cases, I get an average of 29.2 years and I have decided to take 30 as a round figure which cannot be far from the truth. Assuming, then, that there are thirty living property owners for every dead one in the final column of the table on page 53, I have constructed the table entitled "The Division of Property: An Argument from the Dead to the Living," which appears on pages 74 and 75. The figures in columns 1 and 2, taken from the table in Chapter 4, are multiplied by 30 to form the figures in columns 3 and 4. The results are exceedingly interesting.

THE DIVISION OF PROPERTY: AN ARGUMENT FROM THE DEAD TO THE LIVING

CLASSES OF ESTATE THE DEAD

Averages of the Death Duty Records in the five years 1904-5 to 1908-9.

(1) PERSONS. (2) PROPERTY.

£

Less than £100 net 15,956 900,00

Less than £300 gross 18,917 3,600,000

£300 to £500 gross 9,288 3,700,000

£100 to £500 net 6,074 2,700,000

Total Estates not over £500 50,235 10,900,000

£500 to £1,000 net 10,404 8,600,000

£1,000 to £10,000 net 16,910 62,100,000

£10,000 to £25,000 net 2,338 41,000,000

£25,000 to £50,000 net 910 35,100,000

£50,000 to £75,000 net 291 19,400,000

£75,000 to £100,000 net 145 13,200,000

£100,000 to £150,000 net 133 16,900,000

£150,000 to £250,000 net 90 19,700,000

£250,000 to £500,000 net 54 20,600,000

£500,000 to £1,000,000 net 19 13,600,000

Over £1,000,000 net 7 18,100,000

Total Estates over £500 31,301 268,300,000

Grand Total 81,536 279,200,000

CLASSES OF ESTATE THE LIVING AVERAGE VALUE OF ESTATES PER HEAD.

Figures of columns 1 and 2 multiplied by 30 upon the assumption that each dead property owner in column 1 corresponds to 30 living ones.

(3) PERSONS. (4) PROPERTY.

£ £

Less than £100 net 478,680 27,000,000 56

Less than £300 gross 567,510 108,000,000 190

£300 to £500 gross 278,640 111,000,000 398

£100 to £500 net 182,220 81,000,000 444

Total Estates not over £500 1,507,050 327,000,000 216

£500 to £1,000 net 312,120 258,000,000 826

£1,000 to £10,000 net 507,300 1,863,000,000 3,672

£10,000 to £25,000 net 70,140 1,230,000,000 17,536

£25,000 to £50,000 net 27,300 1,053,000,000 38,571

£50,000 to £75,000 net 8,730 582,000,000 66,600

£75,000 to £100,000 net 4,350 396,000,000 91,034

£100,000 to £150,000 net 3,990 507,000,000 127,067

£150,000 to £250,000 net 2,700 591,000,000 218,800

£250,000 to £500,000 net 1,620 618,000,000 381,481

£500,000 to £1,000,000 net 570 408,000,000 715,789

Over £1,000,000 net 210 543,000,000 2,585,714

Total Estates over £500 939,030 8,049,000,000 8,571

Grand Total 2,446,080 8,376,000,000 3,424

In the first place, the total property comes out at £8,376,000,000 which is about £5,400,000,000 less than the estimate of private property arrived at in Chapter 5. This is not surprising. There can be no question that a considerable amount of property evades the Death Duties. On page 78 will be found details, taken from the Reports of the Inland Revenue Commissioners, of the various descriptions of property which passed in the year 1908-9. Take the item "Household Goods, Apparel, etc." It amounts to but £6,000,000. Now, in Chapter 5, as the reader will remember, I formed an estimate of £550,000,000 as the value of such effects, this estimate being £400,000,000 lower than that made by Sir Robert Giffen twenty years ago. The £6,000,000 is officially described as relating to "household goods, pictures, china, linen, apparel, etc." Multiplied by 30 it gives but £180,000,000, which is certainly £300,000,000 less than it should be. It will be seen that "Book Debts, Stock, Goodwill, etc.," figure for only £17,000,000 in 1908-9, pointing to under-estimation. Similar undervaluation probably obtains in regard to other items of property, while bonds to bearer frequently escape taxation. Of investments in places overseas a very great part undoubtedly escapes death duty.

Another and most important point is that a considerable amount of property eludes the Death Duties through gifts by the living. The following figures are significant:—

COMPARISON OF (1) INCOME TAX ASSESSMENTS AND (2) ESTATE ASSESSMENTS

Gross Assessments to Income Tax. Million £ Net Estates Reviewed for Death Duties. Million £

1895-6 677.8 213.2

1896-7 704.7 215.8

1897-8 734.5 247.3

1898-9 762.7 250.6

1899-1900 791.7 292.8

1900-1 833.3 264.5

1901-2 867.0 288.9

1902-3 879.6 270.5

1903-4 902.8 264.1

1904-5 912.1 265.1

1905-6 925.2 272.2

1906-7 943.7 298.5

1907-8 980.1 282.3

1908-9 1010.0 270.9

It will be observed that there is a remarkable lack of correlation between the income tax and the death duty assessments. The former have grown most satisfactorily. The latter grew in the first few years of the operation of the Harcourt revised Death Duties and then became, for practical purposes, stationary. There can be no doubt that the explanation is to be found in the increase of gifts made inter vivos to avoid the payment of death duty, and that the estates reviewed in 1908-9 should have been nearer £400,000,000 than £300,000,000.

Parliament has tried to meet this avoidance by enacting (Finance Act of 1909, which was passed into law in 1910 after rejection by the Peers in 1909) that gifts inter vivos shall not be exempted from death duty unless made more than three years prior to the death of the giver.

The apparent discrepancy between the £8,376,000,000 arrived at on page 75 and the £13,700,000,000 arrived at on page 65 is therefore not an inaccuracy, but an accurate consequence of the facts referred to.

As it stands, then, the table on pages 74-75 represents the greater part, but not the whole, of the property of the persons to whom it relates. Nevertheless, it gives us as accurate an idea of the manner of distribution as though it dealt with the whole.

Classification according to (1) Size of Estate and (2) Description of Property, of the Gross Value of the Estates which passed at Death in the Fiscal Year 1908-9

Size of Estates Stocks, Funds, Shares, and other like Securities. Cash in the House and in Bank. Money lent on Mortgages, Bonds, Bills, etc. Trade Assets, i.e. Book Debts, Stock, Goodwill, etc.

£ £ £ £

Not exceeding £300 gross 239,910 1,263,509 119,186 222,528

Between £300 and £500 gross 392,345 974,686 211,362 262,508

£100 to £500 265,873 354,133 110,053 664,130

£500 to £1000 1,586,521 1,633,265 760,018 863,702

£1000 to £10,000 21,247,265 6,169,300 7,281,737 4,296,571

£10,000 to £25,000 18,767,290 2,345,310 4,112,023 2,184,906

£25,000 to £50,000 17,675,813 1,454,151 3,111,506 1,704,057

£50,000 to £75,000 10,562,035 726,051 1,561,811 1,334,990

£75,000 to £100,000 7,534,683 572,995 1,354,405 852,908

£100,000 to £150,000 10,175,403 567,701 1,479,966 668,643

£150,000 to £250,000 9,738,895 317,672 888,356 736,528

£250,000 to £500,000 11,377,749 860,505 1,648,587 1,244,988

£500,000 to £1,000,000 3,370,659 36,126 280,636 1,177,432

Over £1,000,000 6,318,402 616,113 82,533 1,059,061

Total 119,252,843 17,891,517 23,002,179 17,272,952

Size of Estates Policies of Insurance. Household Goods Apparel etc. Agricultural Land. House Property and Business Premises.

£ £ £ £

Not exceeding £300 gross 562,756 277,353 100,014 598,220

Between £300 and £500 gross 353,865 210,848 94,088 967,152

£100 to £500 507,869 239,037 329,362 2,862,200

£500 to £1000 844,829 404,730 588,750 4,120,809

£1000 to £10,000 3,553,234 1,673,603 4,102,764 18,168,513

£10,000 to £25,000 1,400,980 849,525 2,432,372 6,516,563

£25,000 to £50,000 1,067,993 633,560 2,465,454 4,322,623

£50,000 to £75,000 314,705 360,607 1,407,645 2,091,525

£75,000 to £100,000 337,012 208,217 1,741,005 1,161,460

£100,000 to £150,000 490,791 364,077 1,373,393 1,635,301

£150,000 to £250,000 535,038 336,487 1,542,264 1,454,949

£250,000 to £500,000 279,200 448,789 1,611,265 1,222,858

£500,000 to £1,000,000 179,368 -*39,952 1,649,580 614,244

Over £1,000,000 282,723 225,708 1,253,498 307,871

Total 10,710,363 6,192,589 20,691,454 46,044,288

* Capital transferred in the year to other classes exceeded that brought into these classes.

Size of Estates Ground Rents and similar Burdens. Other Property. Total Gross Capital Values.

£ £ £

Not exceeding £300 gross 1,505 388,068 3,773,049

Between £300 and £500 gross 5,811 397,431 3,870,096

£100 to £500 13,008 517,903 5,863,568

£500 to £1000 43,922 1,226,606 12,073,152

£1000 to £10,000 571,404 7,811,769 74,876,160

£10,000 to £25,000 790,506 4,802,567 44,202,042

£25,000 to £50,000 724,520 4,199,814 37,359,491

£50,000 to £75,000 371,867 2,061,497 20,792,733

£75,000 to £100,000 271,003 1,225,183 15,258,871

£100,000 to £150,000 354,061 1,485,937 18,595,273

£150,000 to £250,000 561,046 2,479,257 18,590,492

£250,000 to £500,000 411,398 2,257,972 21,363,311

£500,000 to £1,000,000 105,066 992,010 8,365,169

Over £1,000,000 188,350 6,571,469 16,905,728

Total 4,413,467 36,471,483 301,889,135

The table is full of striking contrasts. I have divided it into two parts, the lower of which consists almost entirely of the income tax paying classes. We should expect those with incomes exceeding £3 per week for the most part to be the property owners of the nation. It will be seen that the number of persons with £500 of property and upwards indicated by this table is 939,000. This number may be compared with our estimate of income tax payers, which was 1,100,000.

Of the 939,030 persons with £8,049,000,000, as many as 312,120 own between them but about £258,000,000, leaving 626,910 persons with £7,791,000,000.

Of the 626,910 persons with £7,791,000,000, as many as 507,300 have between them £1,863,000,000, leaving 119,610 persons with £5,928,000,000.

And it is amongst the big estates that we must assuredly look for the bulk of the avoidance of Death Duties, which is clearly indicated by the table on pp. 76-77. Thus the closer we get to the facts the more amazing the monopoly of capital appears. It is literally true to say that a mere handful of people owns the nation. It is probably true that a group of about 120,000 people who with their families form about one-seventieth part of the population, owns about two-thirds of the entire accumulated wealth of the United Kingdom.

It is an inevitable consequence of the monopoly of capital by a few people that the distribution of the national income is as pictured in the frontispiece of this volume. If we were quite unable to investigate incomes, we should know without investigation that the facts as to capital must have as a corollary a grossly uneven distribution of income. If, again, we had merely the known facts as to incomes before us, and death duty statistics were not available, we should be able to deduce from them just such a monopoly of wealth as is examined in this chapter.

As to the insignificant fraction of the national wealth owned by the working and lower middle classes, it is mockery to term it the "capital of the working classes," as is done not infrequently. It corresponds, for the most part, to the squirrel's store of nuts. It stands chiefly for sick pay, unemployment benefits, funeral moneys, bits of jerry-built houses, and so forth. It is rarely industrial capital used for the benefit of the savers.

Those who have so little property cannot bargain fairly for the sale of their services with those who own the national undertaking. A small group of private owners exercises the effective government of the nation through the possession of the means of production, which are the means of life. As for the Government at Westminster, it is impotent because, like the mass of the people, it owns little or no property. It cannot even control the chief source of the national wealth—coal, or the prime factor in trade—railways. The investments of the State, like the investments of the masses, are a negligible quantity. And those rule who own.