What happened to all the great nineteenth-century fortunes?
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.
As the new opportunities have created new and greater fortunes, it has taken more and more money to be counted among the super rich. Just since 1982 the minimum price of admission to the Forbes list has risen from $75 million to $225 million, and the number of billionaires has risen from thirteen to fifty-one. This decade has been a great time for fortune builders.
Like the eighties, there have been earlier periods of great fortune building in the country’s history, when people seemed to talk of nothing but money, who had it and how much. To satisfy the public curiosity, journalists even then made lists of the very rich. In 1842 Moses Y. Beach, the editor of the New York Sun, published what is probably the earliest of these, a pamphlet entitled “Wealth and Wealthy Citizens of New York City.” It purported to list the name and fortune of everyone in New York worth more than one hundred thousand dollars.
The richest of all by far was John Jacob Astor at ten million dollars. No one else had more than three million, according to Beach, and only fifteen were worth as much as a million dollars. Although Astor was a German immigrant, most of the list’s fifteen millionaire families bore names from New York City’s old Knickerbocker aristocracy, such as Lorillard, Schermerhorn, Stuyvesant, and Suydam, families that had dominated New York society for generations.
Beach must have engaged in a great deal of guesswork and gossip sifting in order to compile his list, for the Knickerbockers valued their privacy, and public sources of information were few and far between in the 1840s. So popular was Beach’s list that it ran through many editions in its first year, and he soon added short explanations of where the money had come from. Some of these explanations are less than flattering to their subjects, and many are hilarious. In one instance he wrote that the Swords family had been “eminent booksellers many years past,” but noted that “the best literary speculation one of them made was his intermarriage with a Lorillard.”
By the time of Beach’s last edition, in 1855, the number of New York millionaires had swelled to thirty. While the Knickerbockers were mostly richer than ever, their fortunes were already being overshadowed by such non-Knickerbockers as Cornelius Vanderbilt, who had started life as a Staten Island farm boy, and A. T. Stewart, an immigrant from Ireland who more or less invented the department store.
With the Civil War there was a great explosion in both the number and the size of New York fortunes, and the Knickerbockers were quickly swamped by this tide of new wealth. “They find themselves supplanted by upstart princes of Shoddy, vulgar and with unknown grandfathers,” Mark Twain, then a correspondent for a San Francisco newspaper, wrote in 1867. “Their incomes, which were something for the common herd to gape at and gossip about once, are mere livelihoods now. . . . They move into remote new streets up town, and talk feelingly of the crash which is to come when the props are knocked from under this flimsy edifice of prosperity.”
But the crash did not come. Rather, the Gilded Age, the dazzling heyday of the nouveau riche, was dawning. By the 188Os Ward McAllister, the self-appointed social arbiter of New York and creator of the phrase “the Four Hundred,” was forthright about what now counted in New York society. “Our catalogue,” he wrote anonymously in a pamphlet entitled “The 400,” “has been prepared with much care, the names having been well sifted and weighed, and only those admitted who are now prominently to the front, who have the means to maintain their position, either by gold, brains or beauty, gold being always the most potent ‘open sesame,’ beauty the next in importance, while brains and ancestors count for very little.”
McAllister’s Four Hundred actually numbered 554. (In all probability he coined the phrase first and then realized that there was a certain irreducible minimum of people to be included, any of whom he could leave off the list only at his peril.) They were a mixture of some older, still wealthy New York families from the previous era and a great many more whose fortunes were squeaky new but vast in extent. Today they would all be considered very old money indeed. And like the old money they supplanted, they have in their turn been supplanted by the fortunes created in the American economy of the twentieth century.
The secret of the American dream for a hundred and fifty years has been that American society is open-ended at the top. Nothing that could be called an aristocracy has ever arisen in this country, because our greatest fortunes have always been our newest ones.