All things eventually end, even grand dynastic family fortunes. In the abstract, we all know this to be true. But the facts on the ground can be disconcerting. And those facts have never been clearer, not after this week’s release of stunning new research on America’s enduring family wealth dynasties.
In America, the fabled land of opportunity, our wealthiest families have taken full advantage of the opportunities their grand fortunes create. They’ve deployed the power their riches impart to rig our economic and political systems and manufacture the closest thing to a perpetual-motion machine for ensuring dynastic fortune the world has ever seen.
Over the last four decades, the Institute for Policy Studies details in its new Silver Spoon Oligarchs report, the fortunes of our richest wealth dynasties have multiplied tens of times over. Back in 1983, for instance, Wal-Mart founder Sam Walton and his family had a net worth, in today’s dollars, of $5.6 billion. In 2020, Walton’s progeny were sitting on a stash worth over $247 billion.
And the Waltons have hardly been outliers. Some 27 families that appeared on the 1983 Forbes list of America’s richest families also appeared on the 2020 Forbes “Billion-Dollar Dynasties” list. These 27 families have seen their combined fortunes soar by 1,007 percent.
What does a percentage rate that humungous mean in simpler terms? Since 1983, these 27 family wealth dynasties have seen their fortunes triple and then more than triple again, from $80.2 billion in 1983 inflation-adjusted dollars to $903.2 billion in 2020.
The authors of Silver Spoon Oligarchs, the new Institute for Policy Studies report, haven’t just quantified the extent of dynastic wealth in the United States today. They’ve also laid out over a dozen policy moves we could make to shear our dynastic fortunes down to something approximating democratic size. But these policy fixes won’t be going anywhere until we scale the psychological wall — the aura of invincibility — our wealthiest now have guarding their grand fortunes.
Psychologically, this aura has grand fortunes simply seeming too powerful to significantly dent. Our richest families, after all, have enough billions to buy anything. They have politicians in their pockets. They own much of our major media. They’ve outfitted our academic and think-tank worlds with well-endowed centers dedicated to defending grand concentrations of enormous private wealth.
Overcoming the aura of invincibility that envelops our super rich will take more than a well-articulated reform agenda. We need a sense of hope as well, a sense that ordinary people just like us can confront and deflate grand dynastic family fortunes. In other words, we need history on our side — and, fortunately, we have it. Our egalitarian forbears have already once before, against all odds, deflated our nation’s grandest fortunes.
That deflation came in the middle of the 20th century, a century that began in the midst of a Gilded Age even more noxious than our own Gilded Age today. In 1906, the economist Henry Laurens Call ranked the American people by level of privilege for the American Association for the Advancement of Science. Only “one-thousandth” of the population rated as “enormously rich,” Call estimated, with those in “comfortable circumstances” making up about 5 percent of the American people. America’s remaining 95 percent, he went on, “cannot be said to live other than a precarious existence.”
“A sad spectacle this, under any circumstances,” Call lamented. “Viewed in connection with our enormous wealth production, and the billionaire fortunes of the day, it is an infamous spectacle!”
America’s great “inherited fortunes,” added attorney Frank Walsh, the chair of the federal Commission on Industrial Relations in 1915, “automatically treble and multiply in volume” while average Americans toil up to twelve hours a day.
“From childhood to the grave,” Walsh continued, average Americans “dwell in the shadow of a fear that their only resource — their opportunity to toil — will be taken from them, through accident, illness, the caprice of a foreman, or the fortunes of industry.” Average families, he raged, find their babies “snuffed out by bad air in cheap lodgings,” their fathers and husbands “maimed in accidents.”
Leading plutocrats of the day regularly blamed the poor for their plight and blasted the foolishness of any move that would upset the genius of America’s “natural” economic order. James J. Hill, the chairman of the Great Northern Railway, saw “waste, idleness, and rising wages all interrelated to one another” and considered “the modern theory that you can safely tax the wealthy” as “just as obnoxious as the medieval theory that you can safely oppress or kill the poor.”
In one 1909 newspaper interview, Hill, then worth over $2 billion in today’s dollars, faulted the “extravagance” of the American people for the nation’s high cost of living.
“He was asked,” the newspaper story related, “how the American people as a whole could be very extravagant on an average wage of $437 a year, which is the wage that the census of 1900 revealed.”
Extravagance, Hill harrumphed, clearly constituted a “relative” phenomenon. America’s workers, like everyone else, should practice “thrift and economy.” At the time Hill lived in five-floor Minnesota mansion that featured 13 bathrooms, 22 fireplaces, 16 crystal chandeliers, and a reception hall a hundred feet long.
A half-century later, Hill’s world of unimaginable wealth no longer existed. The latest research from America’s most astute wealth-distribution scholars, Emmanuel Saez and Gabriel Zucman of the University of California-Berkeley, has the wealth share of the nation’s top 0.1 percent peaking at close to 27 percent early in the 20th century. By the mid-1900s, that share had nudged below 10 percent.
In mid-century America, corporations were simply no longer manufacturing mega millionaires. Stiff tax rates on top-bracket income — as high as 91 percent in the nearly two decades after World War II — and strong trade unions at the bargaining table wouldn’t let them.
“Many of the top executives in some of our largest corporations have spent a lifetime in the field of industrial management without ever having been able to accumulate as much as a million dollars,” Benjamin Fairless, chairman of the U. S. Steel board, would ruefully posit in the 1950s, “And I know that to be fact because I happen to be one of them myself.”
Investment bankers and swank Wall Street law firms felt the same downward pay pressure. In the mid-century years, notes journalist Malcolm Gladwell, principals in the nation’s top legal powerhouses would look wistfully at the days of opulence gone by. Roswell Magill, a partner at New York’s eminent Cravath, Swaine & Moore, would acknowledge in 1956 that law firms “can no longer honestly assure promising young men that if they become partners they can save money in substantial amounts, build country homes and gardens for themselves like their fathers and grandfathers did, and plan extensive European holidays.”
Before the 1950s, emerging new industries had always created grand personal fortunes. Steel, auto, and oil had left the nation’s economic landscape littered with dynastic wealth. The two greatest economic transformations of the 1950s — the advent of television and the suburbanization of America — would create no lasting economic dynasties.
Business analysts — from American Heritage, Forbes, Fortune, and the New York Times — have over recent years assembled inflation-adjusted lists of the richest Americans of all-time. Many of the fortunes on these lists grew to king size before the federal income tax first became a permanent economic fixture in 1913. The rest of the giant fortunes on these lists emerged after 1980, when tax rates on the rich began their steep downward descent.
None of the lists of the all-time richest Americans include any Americans who hit their economic peak in the mid-20th century.
Mid-century America would, to be sure, still have rich people. But these would be rich people of a peculiar sort. In a 1969 book, New Yorker writer Kenneth Lamott would give the richest of his era a name. He would call them “in fact the Income Tax Rich.” That label made sense. You couldn’t enjoy a great private fortune at mid-century unless you had a privileged relationship with America’s progressive tax system. You either had to have inherited your fortune from a time before taxes in the United States became steeply progressive. Or you had to have been doing your business in an industry — like oil — with loopholes that shielded you from America’s steeply graduated tax rates.
Fortune magazine’s 1957 list of America’s richest would personalize that phenomenon. The Fortune list came divided into wealth tiers. In the top tier, between $700 million and $1 billion, the magazine would only unearth one contemporary American: oilman J. Paul Getty. In the second and third tiers, covering the range from $200 to $700 million, Fortune found 15 grand accumulations of wealth. Eight of these would be inherited, four more either directly or indirectly from oil.
The historic mid-century soaking of America’s rich would climax under a Republican president. In 1960, at an auto industry dinner in Detroit, Dwight Eisenhower would give his own personal take on our economic world. Any society that tolerates a “fabulously wealthy,” he noted, is asking for trouble.
“Since time began,” Ike reminded his comfortable corporate listeners, “opulence has too often paved for a nation the way to depravity and ultimate destruction.”
That depravity, Eisenhower’s remarks went on to suggest, could also destroy us — if we foolishly chose to let the rich “contribute far less than they should in taxes.”
Our political elite, sadly, refused to follow Ike’s advice. His successor in the White House, John Kennedy, asked Congress to drop the tax rate on top-bracket income from 91 to 65 percent. That rate would drop, soon after Kennedy’s death to 70 percent and then, under Ronald Reagan, to as low as 28 percent. The current top rate: 37 percent.
Also precipitously down since the Kennedy years: the share of the nation’s private-sector workers carrying union cards. That’s dropped from over one-third of the labor force in the 1950s to under 7 percent. Rich people-friendly think tanks and political action committees — initially bankrolled in large part by Big Oil fortunes — have sped this shift along.
The result? Today’s unconscionably more unequal America, a place where grand fortunes rule our roost and seem utterly unbeatable. But we beat those fortunes back before — and we can beat them back again. We just have to study how we once prevailed and why we couldn’t sustain that success.