Tuesday, October 9, 2012

Who was Louis Kelso?

Proponents of binary economics cite Louis Kelso and Mortimer Adler as important names in the development of the theory of binary economics. Many people know of Adler. He was a bestselling author, editor of the Encyclopedia Britannica, and so many other things that it would be difficult to do him justice in a brief blog posting — especially when the blog posting is supposed to be about someone else.

Kelso was a lawyer-economist. He was also an author, lecturer and investment banker who is best known today as the inventor of the Employee Stock Ownership Plan (ESOP), a vehicle for corporate finance designed to enable working people without savings to buy shares in their employer company on credit and pay for the shares out of future profits of the company.

He was born in Denver, Colorado, in 1913 and died in 1991 in San Francisco, California. Although he was a Presbyterian, he attended the Christian Brothers school, and got his undergraduate degree at the University of Colorado at Boulder where he also attended law school. He was in the Navy as an intelligence officer.

He implemented the first ESOP in 1956, using theories he had been working on for a number of years. This was to enable the workers at Peninsula Newspapers in Monterey, California, to buy the company.

With Norman Kurland, Kelso was able to persuade the late Senator Russell Long of Louisiana, the son of Huey Long, to champion the initial enabling legislation for the ESOP in the early 1970s. Today in the U.S. there are more than 10 thousand companies employing over 11 million workers that have ESOPs, and in most cases, the workers purchased the shares without risking any of their savings or taking any reductions in pay or benefits.

Now you know.

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