The Richest Men in America

During the turn of the century, 1870-1930, the wealthiest and most resourceful men in American history made their mark.  This was the time of Great Gatsby.  It was the pinnacle of the industrial revolution when great inventions were made and the world was changed forever.  The wealthiest men in American history were worth, in today’s dollars, anywhere from $34 billion to $340 billion each.  The last member of this elite group was Henry Ford, owner of the Ford Motor Company, who died in 1944 with an estimated net worth of about $160 billion in today’s dollars.

After Ford’s death, no American had a net worth greater than $8 billion in today’s dollars – less than one twentieth of the wealth of Henry Ford.  This trend continued until 1987 when Sam Walton broke into this elite class with an estimated adjusted net worth of $45 billion.  Then a remarkable set of events occurred.  In the same manner as the industrial revolution, the top earners in America experienced runaway wealth once again.  In the last 25 years, the accumulated total wealth in the Forbes 400 has now reached proportions not seen since the Jazz Age.  Since 1982, the total net worth of the Forbes 400 has risen by 1200 percent.  Average household income has risen by 263 percent over the same period.  Based on this trend, the turn of the century moguls who once owned the title of top 30 wealthiest Americans of all time, will be completely replaced by men who are growing richer today.

During the turn of the 20^th century, America was tainted by extreme separation of the rich from the poor.  The working class struggled to have their basic needs met.  The wealthy leveraged cheap labor for extreme personal gain.   In the period after WW2, however, America’s middle class gained strength through unionization, taxation, and social programs, thus narrowing the gap between rich and poor to a more sustainable level.  By nearly every historical account, including the reminiscence of our own parents, this period from 1944 to 1987 was the greatest period in American history.  From this observation, it appears the country is not doing as well today as we could be.  The rising wealth of the rich and a resulting weakening of the middle and lower classes is likely to be adding a strain to our economy.

Mark Zuckerberg

Not surprisingly, today’s billionaires do not look like the super-rich of yesteryear.   The richest men in American history are not wearing top hats, suits, and fur coats.  Today’s billionaire is much more humble.  Sam Walton took great pride in driving his old Chevy pickup each day.  Bill Gates, who is worth over 70 billion today, is seldom seen in more than a simple button up shirt.  Warren Buffett often argues that he should be taxed more heavily.  Mark Zuckerberg, worth about $20 billion, wears a hoodie at all times.  It’s difficult to loath this kind of humbleness, but it doesn’t change the fact that these men are growing wealth at a pace only seen once before in history.  If any of these men flaunted their wealth as Gatsby did, we most certainly would have a different attitude.

Let’s not forget, however, that the turn of the 20^th century was a historic period in terms of shaping our entire world.  The development of railroads, steel, oil, automobiles, and electricity helped create the modern age of the next 100 years.  The men who dedicated their lives to these changes became the richest men in America.  It seems that we are now in the midst of another revolutionary age which is far less visible.  Not surprisingly, a large majority of the billionaires on the Forbes 400 today are involved in computer technology.  We have yet to fully realize how computers are affecting our future, but we can be certain the changes are larger and more permanent than we realize.  With the use of computers and technology, corporations are providing more products with less labor, and making record profits.  Conversely, the wages of the average worker remain stagnant, except for a few who are leveraging technology in their favor.  Technological advances are not creating more jobs, instead they are reducing the labor needed to produce the same results.  In his book “Average is Over”, Tyler Cowen makes a very convincing argument that anyone who is not savvy with computers and technology will be underemployed and poor in the near future. 

I wrote about this historic shift in my post “Digital Economy”, January 2013.  The equation is simple; if you are working with a computer, you stand a chance of making a living.  If you are building robots, you stand a chance of living well.  If you are making computers or robots work even better, you may grow very wealthy.  But, if you describe yourself as being hands-on, in the trenches, and not comfortable with technology; you may need to be very concerned about how your future is being shaped by richest men in America.

Tony F.   2013