I just finished Fortune’s Children: The Fall of the House of Vanderbilt by Arthur Vanderbilt II and before that, I read Sons of Wichita: How the Koch Brothers Became America’s Most Powerful and Private Dynasty by Daniel Schulman. While the books predominately take place over 100 years apart, they share the same notion that massive sums of wealth and families mix like oil and water.

Vanderbilt

Cornelius Vanderbilt, or The Commodore as he was called, noted “I have been insane on the subject of money-making all of my life.” And make money is exactly what he did. When he died in in 1877, his estate was valued at $100 million (not adjusted for inflation). The Commodore left his eldest son William 95% of the fortune as he felt he was the only one of his children who would be able to maintain the family fortune and its related business holdings (mostly railroad). In the eight subsequent years that William lived after his father’s death, he was able to double the fortune left to him. But subsequently, it was fairly downhill for the Vanderbilt fortune.

While the book is over 400 pages and goes into great detail about the Vanderbilt heirs, their problems can be summed up quite briefly. First, as the original fortune began getting divvied up among the subsequent generations, living lavish lifestyles like their parents, aunts, and uncles lead many heirs to become broke as the pizza slices of money passed down progressively became smaller. Being a professional socialite was not cheap, especially when an heir married a spouse that also liked to indulge in living as lavishly as possible with their new found fortune. Second, while attention in the first two or three generations was concentrated on growing and maintaining the wealth of the family, as time went on the work-ethic and original vigor for growing and maintaining the wealth vanished. Finally, potential heirs were cast from the family and removed from wills for marrying the wrong person or doing unthinkable things for a family of high society, like getting a job.

One side note is that some of the heirs were vocal in the fact that the vast wealth brought them no happiness and much hardship. The money didn’t give them any purpose. The New York Tribune did a pretty good job predicting what would come in 1877 while the Commodores heirs were protesting his will: “… and we have little doubt that in the course of a few years, it will go the way of most American fortunes; a multitude of heirs will have the spending of it, and it will be absorbed in the vast circulating system of the country.”

Koch

I first became interested in the Koch brothers when I was watching a 60 Minutes special on Bill Koch who has spent tens of millions of dollars tracking down people who have defrauded him and sold him counterfeit wine. Come to find out Bill actually isn’t one of the “Koch Brothers.” He is by blood, but he was cast from the family business decades ago and the two brothers which are referred to as the “Koch Brothers” are Charles and David, who still run Koch Industries to this day.

The patriarch of the family was Fred Koch who had four sons (in order): Frederick, Charles, David, and Bill. Frederick had no interest in the family business and pursued the fine arts instead. Eventually Charles, David, and Bill were all involved in the family business with Charles leading. Fred was a self made millionaire, but his two sons Charles and David made the family billionaires. Bill didn’t see eye to eye with his two brothers and they banished him from the business. This lead to lawsuits between Bill and the Koch Brothers that lasted decades, mainly because Bill and his brother Frederick felt defrauded out of wealth when Charles and David took over control. The brothers were not on speaking terms for decades, but in the last 20 years or so they can at least be in the same room together.

I have no idea what it would be like to have these amounts of wealth, but there are stories all the time of wealth destroying families. Somebody works hard and obtains the wealth, and subsequently their family and friends feel some right to it, and it’s all down hill from there. I found both books extremely interesting.