The following appeared as a “Letter to the Editor” on July 20, 1976, from Chairman of The Joint Economic Committee, 1976, Hubert H. Humphrey
“Broaden Capital Ownership”
In his column on July 4, Hobart Rowen maintained that “Debate Still Needed on Employee Stock Ownership Plans.” I agree wholeheartedly with this. However, I wish to point out that the debate should not be limited to ESOPs alone, for there are many alternatives methods for achieving the ultimate goal, which is to broaden the ownership of capital.
I view this as such an important goal that in addition to introducing with Senator Javits the Employee Stock Ownership Fund Act of 1976, which was discussed in Mr. Rowne’s column, I directed the Joint Economic Committee to seriously examine this goal (“Broaden Capital Ownership”) and the best means to achieve it. The committee began its investigation by holding two very informative days of hearings on ESOPs last December at which Louis O. Kelso and other ESOP experts testified. I am pleased to say that the committee fully endorsed this goal by making it a recommendation in its 1976 Annual Report to the President: “to provide a realistic opportunity for more U.S. Citizens to become owners of capital, and to provide and expanded source of equity financing for corporations, it should be made national policy to pursue the goal of broadened capital ownership.”
The most recent contribution by the committee to the debate on whether such a goal is needed and is justified and, if so, how it should be met, was a staff study released last month entitled “Broadening the Ownership of New Capital: ESOPs and Other Alternatives.” This study is a valuable input into the debate Mr. Rowen says is needed as it presents the overall context for the debate and analyzes many methods other than ESOPs that would broaden capital ownership in the U.S. The latter point is a critical one, for I feel that the more comprehensive types of plans should be subjected to debate, which they haven’t been up to this point, by Congress and the appropriate Executive Departments.
The main advantages of such plans according to the study were: (1) they stimulated both the issuance of stock and its distribution to new stockholders and (2) the new stockholders would, if so desired, consist entirely of lower and middle income Americans who currently own a very small share of this country’s outstanding stock. It is my intention that the Joint Economic Committee continue its efforts in this area by examining these types of plans over the next year.
The broad framework of my thoughts in this area may be stated quite briefly. Throughout my career as a public servant, I have viewed full employment as a top priority goal for this country. And I continue to do so. But I also recognize that capital, and the question of who owns it and therefore reaps the benefit of its productiveness, is an extremely important issue that is complementary to the issue of full employment. I see these as the twin pillars of our economy: Full employment of our labor resources and widespread ownership of our capital resources. Such twin pillars would go a long way in providing a firm underlying support for future economic growth that would be equitably shared.
HUBERT H. HUMPHREY,
U.S. Senator (D-Minn.)
Washington D.C.
