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Issue #1922      July 6, 2020

A few rich families control our economy


The Program of the Communist Party of Australia, describing the main present day economic trend, states:

“We live in the era of monopoly in industry, finance, and commerce […]

“The small industrial enterprise has given way to the giant factory and steel mill [...]

“A financial oligarchy dominates every phase of Australian life.”

In an attempt to cover up their domination the monopolists have invented the myth of “People’s Capitalism.”

According to this myth ownership and control of industry is not being concentrated into fewer hands, as stated by Marx, but is becoming more widely dispersed among hundreds of thousands of small shareholders.

Lenin, in his well-known book, Imperialism, The Highest Stage of Capitalism, long ago demolished this myth. He said:

“Experience shows that it is sufficient to own forty per cent of the shares of a company to direct its affairs, since a certain number of small shareholders find it impossible in practice to attend general meetings.

“The ‘democratisation’ of the ownership of shares, from which the bourgeois sophists and opportunist ‘would-be’ Social ‘Democrats’ expect (or declare that they expect) the ‘democratisation’ of capital, the strengthening of the role of small scale production, is in fact one of the ways of in creasing the power of the financial oligarchy.”

Striking confirmation of the truth of Lenin’s observations and their validity for Australia, is contained in a book entitled Ownership and Control of Australian Companies, by E L Wheelwright, D.F.C., M.A. (St. Andrews), Senior Lecturer in Economics, University of Sydney.

Wheelwright examined the shareholdings of 102 of the largest public companies registered in Australia in 1953.

He found there were 437 million shares held in approximately 490,000 holdings. Of these only 2,000 were large holdings of £10,000 or more nominal value. But these large holdings accounted for thirty-seven per cent of the voting shares.

The remaining holdings were small, being under £10,000 in nominal value, and accounted for sixty-three per cent of voting shares.

“Thus,” comments Wheelwright, “although the greater part of the shares was held by many thousands of small holders, there was a heavy concentration of shares in a few hands – one half of one per cent of the holders owning thirty-seven per cent of “the shares.”

Mr Wheelwright’s investigation substantiates Lenin’s claim that in practice the hundreds of thousands of small shareholders are excluded from control of the company in which their capital is invested.

To exercise effective control today it is no longer necessary even to own forty per cent of the shares.

Mr Wheelwright, on the basis of his analysis, sets the percentage as low as ten to fifteen per cent. He says:

“It has long been realised that in large public companies with thousands of shareholders, the legal rights of the vast majority of shareholders, as far as the selection of directors is concerned, has very little substance in fact. The many small shareholders who collectively own a large company are too numerous, too unorganised and too uninterested to have much control over the selection of management.

“In these circumstances it is possible for a small group of shareholders to be able to select directors, even though they own a minority of the voting capital

“The percentage of voting rights necessary for the exercise of such control will vary with circumstances; with a sufficiently cohesive minority group it can be as low as ten to fifteen per cent.”

Although it is far from his purpose, Mr Wheelwright’s book nevertheless confirms the conclusions of the Communist Party that the main economic trend in Australia today is towards dominance of monopoly.

On the concentration of production, Mr Wheelwright quotes this comment by a visiting American scholar:

“There is a very high degree of “concentration” in the (Australian) economy – the largest seventy-five firms owning nearly forty-five per cent of the total fixed assets in manufacturing. The steel industry and the glass industry are each in the hands of a single firm, seventy per cent of the paper industry in the hands of another, fifty per cent of the rubber industry is in the hands of still another, and so on for many important industries.”

Mr Wheelwright also quotes the thirty-fifth report of the Taxation Commissioner, to illustrate the dominance of the large public company in the economy.

The report for the income year 1953-54 shows that there were 25,508 private and non-private companies with a taxable income of £526.7 million. The taxable in come of the 130 largest accounted for £178 million or just over one-third of the taxable income of all taxable companies, both public and private.

The non-private companies clearly dominate the scene, says Wheelwright. For there were 5,492 non private companies and they received seventy per cent of the taxable income accruing to all taxable companies. The other thirty per cent was attributable to 20,016 private companies.

The giants clearly dominate the public companies, for, of all public companies, the 125 largest earned forty-seven per cent of taxable income, distributed forty per cent of the dividends, had forty-seven per cent of the depreciation, forty-eight per cent of plant value “and bought forty-nine per cent of all plant purchased by public companies.

In manufacturing, the seventy-two largest companies earned forty-two per cent of the taxable income of all companies engaged in manufacturing.

In the distribution of dividends the lion’s share goes to a relatively small handful of the biggest shareholders.

Mr Wheelwright concluded that 1,206 holdings (composed partly of family groups) receive over one-fifth of all dividend paid out directly to persons. The remaining four-fifths are distributed among the other 487,475 personal holdings.

This article originally appeared in Tribune January, 1958.

Next article – Nationwide rally to miners’ side coalfields morale high

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