Tycoons have come and gone, but few are the titans that form dynasties. In America, much weighs against the family that seeks to preserve a financial power base for generations.
Foremost are taxes. So many of the great fortunes were built in the nineteenth century, before personal taxes were levied. They were introduced in 1913, and then followed, in 1916, by inheritance taxes, sounding the death knell of the Gilded Age. But clever accountants found ways to skirt increasingly onerous levies, especially inheritance taxes. Trust funds were formed. Charitable foundations endowed with nonvoting stock. Annuities set up. Trusts were rushed through with such a frenzy to avoid a 1935 tax that they were dubbed "the 1934 trusts."
Even with a viable tax strategy, a tycoon must have able heirs to form a dynasty.
The passion that drives men to create great wealth from nothing typically flags in subsequent generations, which have never been challenged by need. Interests change from amassing cash to spending it. Descendants try to prove their good taste or assuage the guilt of being so rich. Gold diggers are attracted and bad marriages ensue. As the family grows, wealth is further diluted. The best offspring stay the course and add wealth to family coffers. The worst throw cash at whimsical and disastrous investments.
What follows are the families who have, for the most part, solved the happy problem of creating a legacy of power.
THE DU PONTS FIRE POWER
Pierre-Samuel Du Pont de Nemours had as many as seven different plans for making his family's fortune in America after he fled the Reign of Terror in 1800. None of them had anything to do with manufacturing gunpowder. But then, on a hunting trip, his son, Elèuthere Irénée (E.I.), discovered that what passed for gunpowder in the New World was grossly inferior to the powder used in Europe. Convincing his father to let him start a mill on the Brandywine Creek in Delaware, he founded what would become one of the country's oldest family business dynasties.
It didn't hurt, of course, that Pierre was fast friends with Thomas Jefferson, whom he helped in negotiating the Louisiana Purchase. Government contracts followed, boosted by the War of 1812. E.I. borrowed steadily and plowed the profits back into the business, expanding the firm. Meanwhile, older brother Victor became a state representative, initiating the familial tradition of holding political office (the Duponts boast Delaware senators and governors).
The close-knit family's prolific breeding (even in-breeding) helped replenish an employment base often racked by frequent explosions and fires at the mill. When female cousins weren't marrying cousins, they married men who were welcomed into the business. The arrangement kept the company family-owned for decades.
Furthermore, Du Pont offspring--whether they be scientists or businessmen--seemed always to benefit the company in some capacity when needed. Lammot Du Pont developed a formula for black powder that freed the family from using expensive Indian saltpeter. Henry Du Pont created a trade association. The Du Ponts sent a general and an admiral to the Civil War on the side of the Union. Lammot did his part by bluffing Great Britain into supplying the company with saltpeter.
When not supplying war munitions, the Du Ponts sold explosives for construction. By the end of the century, the company had cornered its market, but almost lost it when a family feud resulted in a near sellout. Three cousins stepped forward and bought the business; of these, Pierre Du Pont wrested control, turning the family empire into a chemical giant. Not only did the company begin to manufacture diverse materials, such as plastics, rayon, polyester and Teflon, but it also gained a controlling interest in General Motors. Pierre himself ran GM until he turned it over to Alfred Sloan. The courts forced Du Pont to divest that interest in 1959.
In the twentieth century, family members began pursuing high-profile interests such as sports and art collecting. They have also maintained a large power base within Delaware, holding public offices and owning newspapers. It wasn't until 1971 that someone other than a Du Pont would chair the company's board.--JB
THE ASTORS AN EMPIRE OF FUR
On his death bed in 1848, John Jacob Astor, the man who monopolized the fur industry, was asked if he had any regrets. The richest person in America reportedly answered that he lamented not having purchased all of Manhattan.
The German immigrant, who had redefined the concept of wealth in America, still had the bold acquisitiveness that would make the Astor name synonymous with riches even now.
In the 1790s, the young instrument maker who had come to America with $20 in his pocket started a fur store and became one of America's leading fur traders, despite having never set a trap. Shrewd dealings with Indian tribes and friendships forged with British officials allowed him to branch out into what was then the frontiers of Canada and the Great Lakes. He owned a network of ships that allowed him to move product faster than the competition and to trade with China. Close to Thomas Jefferson, he was among the first to see the benefits of the Louisiana Purchase. By 1827, Astor had created the country's first trust. In 1834, he left the fur trade to focus on New York City real estate, constructing hundreds of buildings. His will provided $400,000 to found the Astor Library, later consolidated as part of the New York Public Library.
Astor's son, William Backhouse, continued to buy real estate in New York, more than doubling the family's worth. One of his sons, John Jacob, gave generously to the Metropolitan Museum of Art, Trinity Church and the Astor Library. Another son married Caroline Schermerhorn, co-creator of The 400, the number of society's elite that supposedly could be entertained comfortably in her mansion. Located where the Empire State Building now stands, the house was converted into the Astoria Hotel, then connected to adjacent property to become the first Waldorf-Astoria.
William Waldorf Astor, the son of the second John Jacob, served as a New York legislator and U.S. minister to Italy before moving to London, buying a viscount title and funding conservative causes.
William Waldorf's elder son, John Jacob, served in Parliament and owned The Times of London. His younger son, Waldorf, served in the House of Commons, succeeded his father as viscount and ran the London Observer. Waldorf's wife, Nancy, became the first woman in Parliament. The couple favored appeasement of Hitler.
John Jacob IV, son of Caroline, was an inventor and sci-fi novelist, who died on the Titanic. His son, Vincent Astor, helped convert family-owned slums into city housing projects and published Newsweek. James Van Alen, Caroline's great-grandson, founded the International Tennis Hall of Fame and introduced the tiebreaker.--BG
THE VANDERBILTS HIGH SOCIETY
In the 1890s, George Washington Vanderbilt, a grandson of railroad baron Cornelius "Commodore" Vanderbilt, was considering building a modest Southern-style mansion on his 125,000-acre North Carolina spread. Architect Richard Morris Hunt, a family favorite, had other ideas. Millions of dollars and 250 rooms later, the Biltmore Estate was the largest private house in America.
An epitaph of the Vanderbilt legacy might read, "By their homes shall they be known." For it was in their spectacular mansions that the heirs of Cornelius Vanderbilt poured his fortune.
In 1810, at 16, Commodore Vanderbilt bought a sailing sloop to ferry freight and passengers from his native Staten Island to Manhattan. He soon graduated to steamboats, and within four decades more than 100 of his ships dominated the New York steamship trade. Vanderbilt was worth millions. To extend his reach, he invested in railroads during the Civil War. Through shrewd management and shady stock dealings, Vanderbilt acquired a vast railroad empire, including the New York Central. When he died, in 1877, he was worth more than $100 million.
Wanting his empire to survive, he left the bulk of his fortune to only one of his 13 children, his eldest son, William Henry Vanderbilt. It was a wise choice. Under William's hand, the fortune more than doubled. But William also brought the "robber baron" label upon the clan with his unfortunate response to a reporter's question regarding the public good: "The public be damned!" After William's death in 1885, his son Cornelius II further increased the fortune, which reached more than half a billion dollars by the 1920s.
Loud and coarse, the Commodore had cared little for New York's high society, and it returned the compliment. His grandchildren, on the other hand, cared very much. From the 1890s to the 1930s they threw excessively lavish parties for hundreds of society's elite at their homes in New York and Newport, Rhode Island. Other Vanderbilts made waves as well. Harold Sterling Vanderbilt was a three-time America's Cup winner during the 1930s and the creator of modern contract bridge. More recently, Gloria Vanderbilt, the object of a bitter custody battle as a child, became a leading fashion designer.
A few Vanderbilts did engage in philanthropy, donating funds to Vanderbilt and Columbia universities, New York's Vanderbilt Clinic, and the Whitney museum, among others. But it was the Vanderbilt passion for homes that brought the clan to a level all its own. In New York City, the grandchildren filled an eight-block stretch of Fifth Avenue with their mansions. In 1892, William K. shelled out $11 million to create Marble House in Newport, while nearby his brother Cornelius II's The Breakers, a 70-room summer "cottage," became the wealthy playground's most opulent mansion.--TF
THE MELLONS BASHFUL BILLIONAIRES
Thomas Mellon was a rising young lawyer in Pittsburgh who did things with cool calculation. Before he took a wife in 1843, he drew up a list of attributes suitable to a "helpmate," conducted "interviews," and then proposed. Mellon later reflected that had the lucky girl refused he would have left "neither sad nor depressed nor greatly disappointed, only annoyed at the loss of time."
That power of cold-blooded assessment was something he would pass on to his sons. He also earned enough money as a judge and a real estate investor to buy them a bank so that they might amass their own fortune. Andrew W. and Richard B. were the progeny who made the most of daddy's largess. Loaning money to the city's burgeoning steel trade, they bought chunks of the foremost industries of the age, installing themselves as members on the boards of directors. They did business with the likes of Henry Frick and the Du Ponts, and made their influence felt in mining, manufacturing, railroads, electronics and just about every other industry.
In 1889, a young engineer came to Andrew Mellon with a patent that would slash the cost of aluminum. The family backed the company that became Alcoa and virtually cornered the market.
At the turn of the century, the Mellons bought the vast Spindletop oils fields of Texas from a broke Yugoslavian prospector and his investors. As Gulf Oil, it made the Mellons billionaires.
But even as the family piled up riches, it remained relatively anonymous. When Andrew became secretary of the treasury under Warren Harding in 1921, the Mellon name was almost unknown to the general public, despite holdings that touched everyones lives.
Andrew's policies, not surprisingly, favored a flat tax for the wealthy, perhaps predicting supply-side economics with his statement that "the prosperity of the lower and middle classes depends upon the good fortune and light taxes of the rich." He made great strides to lower the enormous national debt from the First World War, but met headlong with the stock market crash and resulting bank failures, which dimmed his rising political star. Herbert Hoover eventually shunted him off to a post as ambassador to Great Britain.
While Andrew devoted himself to the nation's finances, his brother, Richard, ran the business. Richard's son, Richard K., took over, devoting himself to cleaning up smog-choked Pittsburgh. Andrew's son, Paul, collected art. As well as leaving an almost inexhaustible storehouse of wealth for their heirs, the Mellons funded charities (Andrew Mellon Foundation) and educational institutions, (Carnegie-Mellon University) that keep the family's name in front of the public despite its ongoing preference for a low profile.--JB
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