This timely and provocative book addresses a great paradox at the core of the American Dream: a passionate belief in the principles of democracy combined with an equally passionate celebration of wealth. Americans treasure an open, equal society, yet we also admire those fortunate few who amass riches on a scale that undermines social equality. In today's era of “too big to fail” investment banks, "vulture capitalist" hedge fund managers, Internet fortunes, and a growing concern over inequality in American life, should we cling to both parts of the paradox? Can we?
To understand the problems that vast individual fortunes pose for democratic values, Robert Dalzell presents an intriguing cast of wealthy individuals from colonial times to the present, including George Washington, one of the richest Americans of his day, the "robber baron" John D. Rockefeller, and Oprah Winfrey, for all of whom extreme wealth is inextricably tied to social concerns. In the process Dalzell uncovers the sources of our contradictory feelings toward the very rich, how they have sought to be perceived as "the good rich," and the reality behind the widespread notion that wealth and generosity go hand in hand in America. Finally, in a thoughtful and balanced conclusion, the author explores the cost of our long-standing attitudes toward the rich.
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About the Author
Robert F. Dalzell, Jr., is Frederick Rudolph Professor of American History, Williams College. His previous books include The House the Rockefellers Built and Enterprising Elite. He divides his time among Williamstown, MA, New York City, and Sweden, ME.
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THE GOOD RICH AND WHAT THEY COST US
By Robert F. Dalzell, Jr.
Yale UNIVERSITY PRESSCopyright © 2013 Robert F. Dalzell, Jr.
All right reserved.
"Man must have an idolthe amassing of wealth is one of the worst species of idolatry."
So wrote Andrew Carnegie in 1868, and not for publication, but scrawled across a list of his current financial holdings. Only thirty years old, with assets of $400,000, he had about decided to abandon what he saw as the soul-crushing business of perpetual profit seeking. Instead, over the next thirty years he built in the steel industry one of history's greatest fortunes, the lion's share of which he then spent on a multitude of projects designed to help his fellow human beings. Thus did he escape making wealth his personal idol. Nor was that all he escaped. His years in business had been marked by brutal ruthlessness toward anyone who challenged his willincluding his workers, most notoriously in his battle to crush the Homestead strike of 1902, which cost sixteen lives. But there too money had its uses. As one of his biographers wrote: "He did not die disgraced; he had given it all away."
So once heartily disliked by his fellow countrymen, Carnegie lived to see his reputation sponged cleanto become one of America's "good rich." Indeed for many people his life would stand as the founding model of everything it took to belong to that fabled fraternity, a view Carnegie himself eagerly promoted, though in reality he was following a tradition stretching back to the earliest days of British settlement in North America. And if his fortune had for a while seemed uniquely large, in time John D. Rockefeller would earn far more than Carnegie ever had. The two differed in other ways as well. But they remained unitedas do we allby one venerable strand of American culture, and that is the abiding paradox at the core of our attitudes toward wealth and democracy.
That paradox is the subject of this book.
Broadly speaking, my approach has been shaped by three propositions, one obvious, the other two hardly less so, although they are easily taken for granted. The first is that from the beginning ours has been a capitalist society; the second, that the chief function of capitalism is to create wealth; and the third, that even at its most successful, left unmediated, capitalism does nothing to ensure the equitable distribution of that wealth. In fact it usually does just the opposite: under its aegis a small number of people become rich, leaving the rest of the population to arrange themselves on the downward sloping terrain below.
Wealth and inequality, then. But if that is what capitalism appears to bring, people can and do imagine very different outcomes, as the brilliant young aristocrat Alexis de Tocqueville discovered on his travels in the United States during the 1820s. Nothing more impressed him about the nation he saw than the extraordinary degree of equality that prevailed throughout it. As he declared in his magisterial Democracy in America, "Men are there seen on a greater equality in point of fortune and intellect or, in other words, more equal in their strength, than in any other country in the world, or in any age of which history has preserved the memory." He also noted how deeply attached Americans were to this "equality of condition" or "the democratic principle"phrases he used interchangeably. Yet at the same time he took care to qualify his assertions in one crucial respect: "I do not mean that there is any lack of wealthy individuals in the United States. I know of no country, indeed, where the love of money has taken stronger hold."
A passion for equality paired with widespread wealth and a love of moneytruly this was a paradox, and perhaps to soften the incongruity of the combination Tocqueville went on to suggest that money circulated so rapidly in the United States that it seldom landed anywhere for very long, thereby making large private accumulations of wealth only a fleeting affair. As he put it, "Experience shows that it is rare to find two generations in full enjoyment of it." But even as Tocqueville wrote, John Jacob Astor and Cornelius Vanderbilt were building fortunes that two hundred years later still support their descendants, and scores of similar examples could be cited. (Of those appearing on Forbes magazine's 2011 list of the four hundred richest Americans, fully 29.8 percent inherited all or part of their wealth.) So the paradox stands. Regardless of our democratic ideals, wealth can last for generations in American families.
On the other side of the balance it must be noted that our love of money does not always extend to its possessors, as the steady drumbeat of recent headlines about "obscenely large" Wall Street bonuses shows. On the contrary, in myth and legend some of our nastiest villains have been richmean-hearted plutocrats consumed by greedfigures like Jay Gould, Samuel Insull, and, more recently, Bernard Madoff.
Ultimately, though, making villains (or heroes, as we more often do) of the rich tends to say as least as much about us as it does about them, for it is we who fashion those characterizations: the emotions that lie behind them are ours, not theirs. Nor is it enough to recognize how strong those emotions can be, or how widely they sometimes diverge. To understand them we have to search for their originsto uncover the sources of our complex and often contradictory feelings about the rich.
With this in mind, in the first part of the book I have focused on the lives of five Americansall of them richto see not only what gave direction and meaning to their lives but also, and more importantly, what has shaped our attitudes toward them and the role our democratic values have played in that process. Also for the reasons noted above, I have not included Andrew Carnegie in the group, though he will make an important cameo appearance later.
Listed in chronological order the five are:
Robert Keayne, a Puritan merchant in seventeenth-century Boston who ran notoriously afoul of his fellow citizens for charging too much for his goods and spent the rest of his days disputing the case against him and planning a series of impressive benefactions for the town that had treated him so harshly.
George Washingtonplanter, land speculator, slave owner, victorious general of the American Revolution, and first president of the United Stateswho began life wanting nothing so much as wealth and the power it brought, yet lived to renounce both.
Amos and Abbott Lawrence, brothers, merchants, and, later, manufacturers who built a great fortune in the cotton textile industry and who also became noted philanthropists, though they disagreed completely about what form their generosity ought to take.
John D. Rockefeller, who parlayed iron-willed determination and a genius for business into unimaginably vast wealth, while at the same time pursuing a parallel career in philanthropy, using business principles to organize what he called "the difficult art of giving."
Next, moving forward in time, I shall examine what later generations of the Rockefeller family did with the money they inherited. Then, to bring all this up to date, I have chosen a source already mentioned: Forbes magazine's annual list of the four hundred richest people in Americabillionaires allto see how they became so rich and what they do with their money, particularly that part of it set aside for philanthropic purposes.
I chose these individuals for several reasons. First, because of the sheer magnitude of their wealth. During their lifetimes each of them stood at the pinnacle of wealth in American society. The pride and glory of free-market capitalism, these were the richest of the rich. Second, all of the initial five and at least some of the others did choose to commit a sizable part of their fortunes to helping others. In them we see wealth and generosity joined to an impressive degree. And something else that drew me to them was that at one time or another many of them faced formidable public criticism. Selfish, heartless, greedy, cold, cruel, and criminal: the epithets hurled at them could be all too angryand disturbing.
So what can we learn from such lives? To begin with, a sense of where great wealth has come from in the United Statesthe economic, social, and cultural factors that generate it, no less than what it takes in personal terms to drive certain people to accumulate a disproportionately large share of whatever passed as wealth at the time. Then there are the costs and benefits of that achievement, including what has led the rich or, at any rate individuals like these, to devote time, energy, and money to acts of generosity.
Fully as significant, too, is the question of how such people see themselves and also how their fellow countrymen have seen them, which brings us back to the paradox with which we began. Six decades before Tocqueville visited the United States, Abigail Adamsin words almost identical to hisplayfully asked in a letter to her cousin Isaac Smith: "Don't you think this little spot of ours better calculated for happiness than any you have yet seen? Would you exchange it for England, France, Spain or Italy? Are not the people here more upon an Equality in point of knowledge and of circumstancesthere being none so immensely rich as to Lord it over us, neither any so abjectly poor as to suffer from necessaries of life?" Like Adams, too, most of us to this day resolutely persist in believing that the nation's identity is indissolubly linked to democracy, to equality, and that includes every one of our subjects. Being rich was never something they could take for granted. Indeed, for many it proved to be a source of genuine anxiety.
Put succinctly, what we have, then, is a group of people who won great wealth, tended to anger their fellow Americans in the process, and out of conviction, or guilt, or a desire to improve their imagesor some combination of those impulseshave chosen to give away a lot of money. But while in broad terms this thumbnail narrative might seem to describe the lives in question well enough, it leaves out vital facts. Details do matter. The wealth that distinguishes these individuals was earned in different ways. Their generosity has also taken different forms, and it began at different points in their lives: some were generous from the start, others waited until very near the end, which John D. Rockefeller, a lifelong philanthropist, dismissed as behaving like "the man who plans to do all his giving on Sunday."
Yet however they managed their generosity (and in no small part because of it), in the end they have succeeded in endearing themselves to us, just as Andrew Carnegie did. Even in cases where we once thought only of selfishness and greed when we saw their names or faces, we now perceive upstanding public benefactorsindeed, "the good rich."
Also crucial, along with their philanthropy, in winning our good opinion are the narratives they themselves construct to convey to the world their own sense of their motives and achievements. Several wrote autobiographies. Two left wills that went well beyond what is usually found in such documents. In addition, we have letters to and from some, as well as public statements made by many of them about themselves. And taken together, what these narratives constitute is a powerful argument proclaiming, if not the innocence of their creators, then at least their earnest desire to explain themselves to us. Implicit in them, too, is an invitation to complete the stories they tell: to add the essential dénouement ourselves, by choosing to forget just how angry such individuals can make us, which by and large we have done, in spite of our democratic ideals.
So the narratives are ours as well as theirs, and what they express on both sides appears to be a serious, indeed a heartfelt, desire to forge an accommodation between wealth and democracy, to blend the two in a way that not only affirms our democratic faith but also accepts a corresponding affirmation from the richor at any rate from those of them who care about such things.
Yet there is also another reaction we have had to lives like these, one that unlike the first would not at all have pleased the individuals in question. In telling their stories they invariably worked at making clear how different they were from the great majority of the "merely" richthose who spent their money living opulently and preserving whatever remained for their descendants. Ironically, however, we tend to assume that precisely the opposite is true: that to be both rich and generous is par for the course in America, a broad pattern, endlessly repeating itself across time. The result of that assumption, in turn, is a unique national consensus that simultaneously applauds the creation of wealth and adds a moral dimension to it by assuming thatwhatever their transgressionsits creators will invariably both seek our forgiveness and share with us a substantial portion of their gains. In short, the paradox disappears, and in its place wealth, democracy, philanthropy, and absolution are joined together in a single, harmonious whole, which has come to stand as one of the defining paradigms of American culture.
Still, like all such visions this one has to be measured against reality if it is to do more than simply make us feel good. Certainly one question we need to ask is whether the rich really are as generous as we seem to want to think they are. And the evidence on that point, as we shall see, is not unambiguous, but a short answer would appear to be that while some are, others definitely are not. (In 2009 the editors of Forbes magazine reported that only ten people on their annual list of the four hundred richest Americanswhose average wealth was $3.6 billion and in some cases rose to more than ten times that amounthad given away as much as $1 billion, prompting one of their number to remark, "It's a shame there aren't a lot more.") And if the record is uneven, it would also seem to be worth asking what we gain by believing otherwise, as well as what we lose as a result. If the rich can not reliably be counted on to "give back"if doing so is not the normwhere does that leave us?
That question, too, becomes particularly pressing in light of the current trend toward steadily rising levels of inequality in the distribution of wealth and income in the United States. If in fact we are becoming less equal, and therefore less democratic as a nation, what can we say of a narrative that has long been offered as a kind of counterweight or antidote to the presence of inequality among us? Indeed, even if the rich did give back at the rate we imagine they do, would it be enough to matterto truly make a difference? This and other issues will be considered at length in the conclusion of the book. Before then, however, we must meet the characters described in the chapters to come. And happily, most of them turn out to have led fascinating lives, full of odd twists and turns and even a memorable cliff-hanger or two.
For the rest, while reading those chapters it may be helpful to keep in mind a statement Andrew Carnegie made to Britain's William Gladstone and later repeated in his famous essay "Wealth" (or "The Gospel of Wealth," as it is usually known): "The man who dies rich dies disgraced." A skeptic might well reply: "Disgraced, perhaps, but doesn't history show that in all likelihood the man's wealth will live on, secure in the hands of his heirs?" Certainly there is ample evidence for such a view. And failing Carnegie's opinion in the matter there is always the much-quoted exchange between F. Scott Fitzgerald and Ernest Hemingwaythe one that has Fitzgerald remarking, "The rich are different from you and me," to which Hemingway is supposed to have replied, "Yes, they have more money." The story is almost certainly apocryphal, but true or not it conjures up, in a crisp and entertaining way, two very different attitudes that invariably buzz around even the briefest encounters with the American rich.
Chapter TwoROBERT KEAYNE'S CONTRACT WITH BOSTON
An ocean away from "home," the first English settlers in North America had no choice but to build their lives anew. They were not completely isolated, however. Trade with England would be an essential part of their experienceand indeed the driving force behind the developing American economy. Thus the ragtag English settlement at Jamestown, in Virginia, achieved stability only after its inhabitants discovered in tobacco a commodity that could be marketed profitably abroad. In Puritan New England ocean-borne commerce was equally vital.
Yet as they imported goods from abroad to sell wherever they could find buyers, New England merchants, in addition to the usual dangers of their callingshipwrecks, falling profits, the lack of a reliable currencyalso faced, looming around every corner, a dense thicket of religious beliefs that saw service to the community as the proper goal of all human activity. And in Boston during the early years those beliefs proved strong enough to land at least one wealthy merchant in court for charging what his fellow colonists saw as too much for his wares. In that position he hador should have had (for he was convicted as charged)two options. He could either leave Massachusetts and settle elsewhere, or he could stay, make a decent show of contrition, and content himself with lower profits.
Robert Keaynefor that was his namedid neither. Instead he remained in Boston and was still arguing his case twenty years later, knowing full well that the difficulties he faced were formidable. Because what he was calling for was a freer, more open society that accepted the fundamental fairness of a market economy and the wealth it produced.
Nothing about the story would ever seem simple, not to him, not to those confronted with his explanations of it in years to come. A successful London merchant, in 1635 he had joined the decadelong Puritan immigration to New England and settled in Boston, where he added to his wealth, trading in goods imported from Londonuseful items the townspeople had serious need of, if they were to have any chance of living as they had in England. Yet before long those same people fell to grumbling about his prices and the interest he charged for late payment of them. In the end he found himself tried, censured and fined, and, more troubling still, made to confess his "sins" in church. For the rest of his life he would brood over those events. His cascading thoughts, justifications, and quarrels with his accusers and judges even made their way into his final will and testament (his "Apologia," as it has come to be called), stretching it out to more than fifty thousand words.
Excerpted from THE GOOD RICH AND WHAT THEY COST US by Robert F. Dalzell, Jr. Copyright © 2013 by Robert F. Dalzell, Jr.. Excerpted by permission of Yale UNIVERSITY PRESS. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Table of Contents
Creating the Paradigm
1 Paradox 3
2 Robert Keayne's Contract with Boston 10
3 George Washington, Revolutionary 26
4 The Brothers Lawrence 51
5 Rich as Rockefeller 71
6 Heirs 95
7 Successors 126
8 Wealth and American Democracy 154
Notes and Sources 169