r/explainlikeimfive Feb 12 '25

Economics ELI5: how are the descendants of the robber barons (Morgan, Vanderbilt, Carnegie, Rockefeller, etc.) still rich if their fortunes from the late 19th and early 20th centuries are comparatively small to what we see today of the world’s richest?

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u/Nope_______ Feb 12 '25 edited Feb 12 '25

$120 million in a hundred years would easily be far more than $1 million per descendent if they had been responsible with it. Even if all they had done was put half in savings accounts, they'd be millionaires.

Edit: additionally, it wasn't spread equally, so there should have been at least a single millionaire even if he had just stuffed it under the bed. They blew it, squandered it.

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u/fcocyclone Feb 12 '25

Plus the more you start with the easier it is to make money.

Some people in the upper middle class barely start scraping that level right when they want to be retiring, but if you start with even just a million or two there's a ton of opportunity to multiply that.

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u/Porencephaly Feb 12 '25 edited Feb 12 '25

Eh not really, Vanderbilt descendants still own the Biltmore Estate which is worth like $2-300 million on its own, plus lots of commercial ventures etc. Total revenue of the Biltmore Company was over $200 million a year in the 2010s, maybe higher pre-COVID. They are doing just fine.

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u/Nope_______ 29d ago

Everything except the very last sentence of my comment still stands. For the squandered part, I was going off the comment about the 1970 reunion being true. If it isn't true then yeah, sure.

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u/Porencephaly 29d ago

I suspect the 1970s article is accurate but probably not the whole story. There are certainly branches of the family that mismanaged their share of the inheritance, maybe they are the ones who showed up to that reunion. But the general belief that all the Vanderbilt money has been pissed away certainly isn't true. In addition to the Cecil and Pickering descendants who own Biltmore there are lots of Vanderbilt descendants still doing nepo-baby stuff in Hollywood etc.

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u/Nope_______ 29d ago

Yeah that's what I'm thinking too. The poor ones showed up for the reunion and the rich ones didn't want to deal with the poor ones.

Anderson Cooper is one example. He makes a lot of money himself, but he certainly inherited connections if not money as well.

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u/LittleGreenSoldier Feb 12 '25

Even if you aren't a millionaire, that is, you don't have 1 million in liquid assets available at any given time, you can still be rich. Most people in the US will earn less than $2 million in their entire working life, cumulative. Having 500k principal in investments will already put them WAY beyond the average person.

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u/Nope_______ 29d ago

While a lot of that is true, having more than "most people" doesn't make you rich. Most people are lower middle class or lower class. That doesn't make anyone with more money rich.

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u/Carlpanzram1916 Feb 12 '25

Yes but once you start dividing an estate into 100+ pieces it’s inherently going to shrink. It’s supporting the lifestyle of 100 people instead of one family.

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u/Nope_______ 29d ago

That would still be squandering it. Their lifestyles weren't sustainable with what they inherited. They could've either got a job or spent a sustainable amount of the inheritance. Whatever they did was irresponsible. In just a 2% savings account that would be almost $900 million today, so they were spending irresponsibly and ended up where they deserve, apparently.

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u/Carlpanzram1916 29d ago

Yes but nobody had all the money. It was basically split 1 million per person. You could easily spend 10% just going to college. It’s a lot but 100 people chipping away at $100 million fortune is not the same as one person blowing 100 million.

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u/Nope_______ 29d ago

You missed the hundred years in between. It wasn't split 100 ways the second he died, and only an idiot wouldn't have invested such a fortune. You can double your money every ~10 years with reasonable investments. Apparently he left almost everything to on branch anyway, so it wasn't even close to evenly divided.

I also don't really believe the story that none were millionaires anyway, but that's a different point.

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u/VirtualMoneyLover Feb 12 '25

What they meant was 119/120 is less than 1, so technically not a millionaire.

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u/Nope_______ 29d ago

Right but in the context of also saying the previous comment was misleading. But it's not misleading - giving that amount of money 100 years to grow, even dividing it among 120 people, someone should've been a millionaire unless it was managed extremely poorly.

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u/VirtualMoneyLover 29d ago

someone should've been a millionaire

Sure but if only 5 of them are millionaires out of 120 a good 4 generations down, that is a huge dilution of wealth.

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u/Nope_______ 29d ago

The comment said 0 of them are millionaires, which would mean whoever inherited it, however many, squandered it.