ESTIMATED VALUE OF PROPERTY (TAXABLE AND EXEMPT) IN THE UNITED STATES

By the use of the curves devised for the purpose by Dr. Max O. Lorenz, now statistician of the Interstate Commerce Commission, it is much easier to portray clearly in our minds the relative distribu

I

Taken from United States Bureau of the Census, Wealth, Debt and Taxation, 1913, I, 21, 24-26.

2 Taken by permission from W. I. King, The Wealth and Income of the People of the United States, pp. 71–73, 93. (The Macmillan Co., 1915.)

tion of wealth at different times and places. If each family were equally wealthy, evidently one-fourth of the population would possess one-fourth of the wealth, one-half of the population one-half of the wealth, and so on, and the resulting graph would be a straight line at an angle of forty-five degrees, as shown in the illustration. The more that the curves actually bow away from this line the more unequally is wealth distributed. The curves in Fig. 1 are bent so very far away from this line of equal distribution that they indicate an extremely uneven apportionment of goods.

FIG. 1. A comparison by Lorenz curves of the estimated distribution of wealth in different countries.

269. PROPERTY CONDITIONS OF THE VARIOUS CLASSES

A1

An accurate picture of the property conditions of the various classes is given in Fig. 11.

In this illustration, the relative wealth is represented by cubes whose volumes are, in each case, proportional to the money values of

Taken by permission from W. I. King, The Wealth and Income of the People of the United States, pp. 98-102. (The Macmillan Co., 1915.)

the holdings. In the United Kingdom, the little cube representing the average wealth of almost two-thirds of the people could be removed from the massive cube standing for the average wealth of the rich without causing much more than a nick in the corner, and the

FIG. 11. Relative money value of the property held by the average family in each fraction of the population.

same would hold true to a slightly less degree in each of the other countries. In the great civilized nations, then, most of the wealth is in possession of one-fifth of the inhabitants, but this does not mean that the benefits of property are circumscribed to the same extent. Even the lower middle class enjoys to a considerable degree the first advantage of wealth ownership-viz., the power to provide against

emergency and disaster. They also receive, to a certain extent, the second advantage of private property-freedom of movement-but this only accrues in full measure to the upper middle class. The lower middle class hold to their limited possessions with even greater tenacity than do the rich to theirs; for, as a man grows poorer, the utility of a dollar increases in far greater ratio than the diminution of his wealth. As a result, even the small property possessed by the lower middle class tends to render its members stable and law-abiding and strongly opposed to all forms of anarchy and violence. Hence, the first three advantages of private property from the social standpoint apply to most of the upper third of the population. For the lower two-thirds all of these are absent. Only the fourth advantage of private property-the stimulus to wealth accumulation-affects the poorest two-thirds of the people.

Turning to the private standpoint, we see that only a small minority-the upper middle class and the rich-possess enough property to derive any considerable income therefrom to supplement the proceeds of their toil.

B1

The ownership of wealth in the United States has become concentrated to a degree which is difficult to grasp. The recently published researches of a statistician of conservative views have shown that as nearly as can be estimated the distribution of wealth in the United States is as follows: The "rich," 2 per cent of the people, own 60 per cent of the wealth. The "middle class," 33 per cent of the people, own 35 per cent of the wealth. The "poor," 65 per cent of the people, own 5 per cent of the wealth. This means in brief that a little less than two million people, who would make up a city smaller than Chicago, own 20 per cent more of the nation's wealth than all the other ninety millions.

The figures also show that with a reasonably equitable division of wealth the entire population should occupy the position of comfort and security which we characterize as "middle class."

The actual concentration has, however, been carried very much further than these figures indicate. The largest private fortune in the United States, estimated at one billion dollars, is equivalent to the aggregate wealth of 2,500,000 of those who are classed as "poor,"

Taken from the Final Report of the Commission on Industrial Relations, pp. 23-31. (Government Printing Office, 1915.)

who are shown in the studies cited to own on the average about $400 each.

270. DISTRIBUTION OF INCOME

If the estimates are correct the curves illustrating the relative distributions of income in Prussia and the United States bear as close a resemblance to each other as did those for the same nations which portrayed the distribution of wealth. This gives additional evidence

FIG. 29.-Average per capita money income of each fraction of the population in Prussia and the United States.

in support of the theory that the relative distribution of wealth and income is dependent rather upon the laws governing industry than upon the geography or natural resources of the country concerned. This is indicated by the fact that the relative distribution is very similar in Prussia to that in the United States while, at the same time, Prussia is, absolutely, extremely poor both in wealth and income as compared to its American neighbors.

I

Taken by permission from W. I. King, The Wealth and Income of the People of the United States, pp. 232-37. (The Macmillan Co., 1915.)