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Rich For A Day
What happened to all the great nineteenth-century fortunes?
April 1989 | Volume 40, Issue 3
In the story “Silver Blaze” the clue that most interested Sherlock Holmes was the dog that didn’t bark in the night. In reading the latest Forbes list of the four hundred richest Americans, I was most impressed by the names that weren’t there. My own to be sure, alas, but also Astor, Belmont, Carnegie, Frick, Gould, Harriman, Morgan, and Vanderbilt.
At the turn of this century these names personified American wealth beyond counting, and today they are to be found on street signs, racecourses, universities, parks, hospitals, museums, concert halls, and libraries. But none of the descendants of these men are rich enough to be included, either individually or collectively as a family, by Forbes.
Some, such as Andrew Carnegie, had no children and gave away their fortunes to worthy causes during their lifetimes and at their deaths. But others, like Cornelius Vanderbilt, had numerous children, far more restrained eleemosynary instincts, and a strong desire to establish a dynasty. In New York City at the turn of the century, Vanderbilt mansions lined the west side of Fifth Avenue in an awesome display of the money poured into the family coffers by the New York Central Railroad. Ninety years later the mansions are all long gone, and the Commodore’s great-grandson Harold Vanderbilt was the last of his descendants to possess what could be called a great fortune.
What happened to all the money piled up by these “Mammonites,” as nineteenth-century journalists loved to call them? Why are American fortunes seemingly so ephemeral? I submit that there are two basic reasons.
The primary reason, surely, is that the perpetuity of great fortunes is fostered neither by custom nor by law in the United States. While we have always been hospitable to the making of a fortune, passing it on intact to future generations is another matter.
In Europe, and especially in Britain, many fortunes have remained intact for centuries. The Howards, Dukes of Norfolk, have been among England’s richest families for more than five hundred years. The concept of primogeniture is central to this. Along with any titles, the oldest son also inherited all the land and personal property of the previous head of the family. Daughters, it was hoped, would marry well, while younger sons went into the church, the armed forces, or government. In any event, they were, for the most part, on their own. Primogeniture, however, is a relic of feudalism (where land ownership carried military and political obligations and there had to be enough land to support the cost of these obligations).
Primogeniture never took root in this country, where the tradition has been for family property to be divided more or less equally among all the children. Even the largest of fortunes are dispersed quickly when divided every generation.
In Europe, even when the oldest son turned out to be a spendthrift, the fortune often stayed largely intact. The Duke of Buckingham fled England in 1847, leaving his creditors holding the bag to the tune of one million pounds. This is something on the order of sixty million dollars in today’s money and surely the greatest personal bankruptcy in history. But while the creditors took the paintings, the furniture, the silver, and other personal property, they couldn’t seize the family lands. The duke technically didn’t own them, for they were entailed.
Entail, a sort of perpetual land trust, came into use to save aristocratic families from precisely this sort of situation. The holder of the title could mortgage his income but not the lands from which the income derived. On this side of the Atlantic, while entail existed in the southern and middle colonies, Thomas Jefferson—that aristocratic antiaristocrat—was adamantly opposed to it, and it was ended at the time of the Revolution. Perpetual trusts are not permitted in American law, and as a result the gossip columns have been filled for a hundred years with the details of how many an heir to a great fortune has managed to become free from the burden of it.
The second reason fortunes seem to disappear so soon in the United States is that they are quickly eclipsed by larger, newer ones. Only two types of human beings create great fortunes: extraordinary people and extraordinarily lucky people. It is highly unlikely that the heirs of a great fortune maker will have the requisite talents or luck to do the same. They are far more likely to just hang on to what they have. Therefore, even when fortunes remain undivided, they tend to stabilize at a certain level while new ones surpass them in size.
John Jacob Astor, Commodore Vanderbilt, and J. Pierpont Morgan all left their fortunes to able and energetic sons. But William Backhouse Astor, William Henry Vanderbilt, and J. P. Morgan, Jr., were content to manage their inherited property efficiently. They depended on the rising tide of the American economy to lift to new heights the vast fleets of boats left them by their fathers. So while William Henry Vanderbilt was doubling the one hundred million dollars left him by his father in the maturing railroad industry, John D. Rockefeller was becoming the country’s first billionaire in the brand-new industry of oil.