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.
Jack Bettridge, Bruce Goldman, Terrence Fagan
From the Print Edition:
J.P. Morgan, Mar/Apr 00
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.
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