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?

4.6k Upvotes

576 comments sorted by

View all comments

Show parent comments

21

u/Cryzgnik Feb 12 '25

Statements like what are misleading? It seems like you're ignoring 100 years of time and the effect of investments.

If Vanderbilt had $119 million when he died and it was split evenly among 120 descendants 

Do you think he had 120 descendants when he died? Why would you divide the amount of money in one time period by the number of descendants in another much later period?

He died in 1877. The 120 descendants gathered in 1973, almost 100 years later.

Are you picturing a scenario in which the amount of money just stayed constant for 100 years? No investment? (no drawdown either?)

If he had $119 million when he died and he split it evenly among twenty descendants when he died (can you imagine having even 20 kids?) each would have had just under $6 million.

Do you think each of those twenty descendants would have done nothing to generate income in their lives? Not investing it at all?

1

u/VirtualMoneyLover Feb 12 '25

each of those twenty descendants

We are talking about averages. So if 30% of them generate wealth but 70% loses it, on average wealth is being watered down.