How The 10 Wealthiest Americans In History Got Rich
The beauty of the American dream is that anyone has a shot at being king. There's no guarantee, probability, or any sort of likelihood involved, but as long as you're here, you've got a chance.
Taking advantage of a few of the fast and loose rules in our country's early economy, certain individuals managed to become a little more kingly than others. Today, they're mostly faceless benefactors behind charitable foundations keeping universities, public radio, and other stuff alive, but they used to be vibrant individuals who were masters of making more money than anyone else ever. And while you might know many of their names, it's likely you only vaguely know how they accumulated wealth.
Below are the 10 richest Americans in history. The ranking's from Forbes, which uses a strategy concocted by Michael Klepper and Robert Gunther that compares wealth through history by notating it as percentage of GNP. So come, see how these guys made it rain.
10. Marshall Field, $66 Billion
It's hard to believe a man who founded a store whose mantra was once "Give the lady what she wants" actually made this list. Born on a farm, Mr. Field had his first job in retail working at a dry-goods store. After moving west to Chicago at age 21, he worked at a leading retail shop, eventually becoming a partner. He started buying out competitors' department stores and turning the business into Marshall Field's—the preeminent department store in Chicago, and what was often referred to as the "Macy's of the Midwest."
But for Mr. Fields personally, that just started things. He ultimately made true wealth in wholesale, proving the "business-to-business" model is often much more lucrative than "business to customer."
9. Stephen Van Rensselaer, $68 Billion
Sometimes you don't really need to work for it. On his 21st birthday, SVR inherited a 1,200 square mile estate in Upstate New York. Using his land, Rensselaer became the landlord to end all landlords, with over 3,000 people leasing from him. That, combined with the rest of his inheritance, netted him a ridiculous amount of income. With so much time on his hands (what do landlords do, anyway?) he decided to go into politics and became a fairly liberal Lieutenant Governor of New York. He did a stint in the War of 1812 as a general, and later started Rensselaer Polytechnic Institute when he "retired."
8. Jay Gould, $71 Billion
After building his way up by bookkeeping for a blacksmith and earning an education in Roxbury, NY, Jay Gould got himself into various leather businesses. Eventually, one of those business's partners went broke and Gould bought up all the assets at fire sale prices. With some new cash, he went into the railroad business and invested well enough to muscle Cornelius Vanderbilt (see below) out of the Erie Railroad. (Well, he also used some serious stock manipulations, too.)
This charming individual then cornered the gold market and drove up the price so much that farmers sold more stuff and used his railroads to ship it back east. This all imploded, and he was hit with lawsuits after the bubble popped. But, once again, he learned he could manipulate the market by himself.
After becoming involved in a con that almost resulted an invasion of Canada by Minnesotan militia (not hyperbole), he was forced out of the Erie Railroad and built his own, ending up with control of 15 percent of America's tracks, thanks to some shady business practices. This quote, uh, pretty much sums it up: "I can hire one-half of the working class to kill the other half."
7. Stephen Girard, $110 Billion
Unlike Gould, Girard did something good—namely saving the economy from collapsing during the War of 1812. Born in France, Étienne Girard was uneducated and only had one eye. Since his father was a sea captain, he used the boat to become a merchant and turned himself into a shipping magnate.
In 1811, when the First Bank of the US's charter ran out, he took it over as Girard's Bank, where he was the principle moneylender to the new government. Without him providing massive loans to the government, the war effort would have been unable to go on and we likely would have the Queen on our money. As you might imagine, this banking arrangement left him in great shape after the war and he became the wealthiest man in America. His fortune went to charity.
6. John Jacob Astor, $121 Billion
The man whose name "Astor Place" in New York City carries, Johann Jakob Astor was a German butcher's son who came to America by way of London, where he perfected his English. In NYC, Astor worked in his brother's butcher shop before going north to fur trade with the Native Americans. Diversifying his portfolio, he also was in charge of his brother's musical instrument business and brought a racehorse from England that started the Standardbred bloodline.
Taking advantage of a new fur treaty, Astor opened fur markets and amassed a fortune to the tune of a quarter million dollars. This turned into somewhat of an exclusive deal when Jefferson embargoed imports and exports, yet gave him permission to start a fur company. The War of 1812 hurt business, so his company joined the opium-smuggling business and bought a bunch from Turkey, which he sold to China and England.
After the War of 1812, he invested in real estate, and bought a 99-year Manhattan lease (at a bargain price of $68,000), which proved to be his making. He once had a 70-acre farm between 42nd and 46th streets, west of Broadway. Seeing the boom ahead, he sold his fur company and bought as much of Manhattan as he could. He pretty much owned the city, mostly leasing it. From Astor Place to Astoria, Astor's name lives on.
5. Bill Gates, $136 Billion
As you already know, Bill Gates grew up with computers before anyone knew what they were, programming and tinkering in his spare time. In high school he wrote programs for the administration, and wrote loopholes to put him in classes with more girls. At Harvard, his algorithms crushed really hard math problems and he decided to drop out to start his own software company.
Along with Paul Allen, Gates contacted a micro-computer company and wrote a BASIC interpreter for them, which resulted in a contract and, eventually, Microsoft. When the software leaked, Gates wrote a letter demanding payment for it and introduced the concept of paying for software.
Eventually Microsoft got their big break when IBM wanted to use their operating system. Smartly, he didn't sell it, but licensed it, just in case other hardware companies were interested. Of course they were. MS-DOS became huge. Windows was bigger. Computers blew up. The internet happened. Bill Gates got RICH.
4. Cornelius Vanderbilt, $185 Billion
After quitting school at 11, Cornelius Vanderbilt started a small ferry business, which resulted in him buying a steamboat and getting in with a very powerful businessman named Thomas Gibbons, who taught him how to be a smart businessman. When Gibbons died, Vanderbilt stayed on with Gibbons's son, and then bought him out.
Little by little, Vanderbilt gained control of the ferry lines around the city and made a secret monopoly by having an under-the-table partnership with a rival company. Since his ferry business grew around the time of the railroads, he became involved with the latter, since railroad routes often relied on steamships.
Meanwhile he bought a ton of land in New York and after the Gold Rush, Vanderbilt got into ocean liners, later taking the railroad business to the next level. He invested in a handful of railroad companies, including the New York and Harlem Railroad, and built Grand Central Terminal. Just outrageous wealth.
3. Henry Ford, $199 Billion
Yes, you know the man turned the automobile from a curiosity to a must-have. But how? He had been working for the Edison company and experimenting with cars on the side. After building two, he was given backing by a lumber magnate and started the Detroit Automobile Company. It didn't last; the cars were terrible. But then he started a different company: The Henry Ford Company.
Unfortunately, the lumber magnate wanted someone else running Ford, so Ford left and that company was renamed Cadillac. Once again, Ford found some new investors, started the eponymous Ford Motor Company, eventually building a car that would earn the land speed record.
A few years later the Model T came out, built simply by the assembly line, a novel concept of its own. The affordable car sold incredibly well and the car became something the average American could easily afford. He changed America more significantly than anyone else in the 20th century...and made a lot of money doing it.
2. Andrew Carnegie, $310 Billion
Carnegie started out as a telegraph operator, able to decipher Morse code without paper. He shot up the ladder in the railroad company (railroads and telegraphs were linked, remember) and had enough money to invest in businesses. Reportedly using a little insider trading, Carnegie invested in Adams Express, which led to other investments and reinvestments in related industries.
Carnegie slowly ballooned his influence from railroads and telegraphs to steel and oil—all things essential to the war effort against the South. After the war, Carnegie left rail for bridges and other ironworks. It soon became a steel empire—which was where Carnegie made his true fortune—by innovating the technical process and vertically integrating his business. Soon, America's steel output surpassed Britain's and Carnegie was the richest man in the universe.
1. John D. Rockefeller, $340 Billion
John D. Rockefeller was born to a con artist, but didn't take after his pop, and became a bookkeeper. After he gained some experience, he found some investors and put together a produce company. With that money, he invested in oil and built a refinery with a few others, who he soon bought out, putting him in a good position to take advantage of the post-Civil War economic boom. When the war ended, he had one of the main refineries, and founded Standard Oil.
With this new company, Rockefeller started buying competing companies and incorporating some questionable business practices. Standard was soon behind 90 percent of the country's oil, and in all petroleum products, not just oil oil. Not only was Standard everywhere, Rockefeller and Standard owned every part of the process, so they didn't have to rely on wholesale. Standard was ubiquitous as dozens of companies were under the banner "Standard Oil Trust." It was the first major "holding company" and became an invincible juggernaut in the American economy.
Rockefeller eased back on oil due to public criticism, and went after steel, clashing with Carnegie. Eventually, Standard was called out for its monopoly and told to break up. This, of course, proved extremely profitable for Rockefeller, who hit his high water mark of $900 million, or 1/44th of the United States gross national product.