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Rich
I Introduction
II Six Eras of the American Rich (1920-2009)
III Wealthology™ Topline
IV Conclusion© Culture Planning LLC
Rich
I Introduction
I Introduction
Historical sweep of the American rich helps puts today’s story in context
- Backstory of our fascination with the wealthy elite
- Valuable perspective on today’s economic turmoil
I Introduction
Use sources’ definitions of “rich” and “wealthy” rather than set arbitrary level
of net worth or income
- Terms have constantly shifted over past century
I Introduction
Trajectory of the American rich not a straight line
- Lots of twists and turns, ups and downs
I Introduction
Democratization of the American upper class the biggest story
- First mass affluent class in history
- More people with more money than any other civilization
I Introduction
Victory of the American rich has come at a cost
- Loss of an identifiable wealth culture
- Social signifiers of elitism (privilege, entitlement, discreetness, snobbery,
noblesse oblige) virtually extinct
- USA arguably a “poorer” place
I Introduction
Almost complete triumph of New Money over Old
- Lots of “rich” Americans, very few “wealthy” ones
- Class now strictly a function of how many dollars one has versus
background, family name, or other once important factors
I Introduction
Other themes:
- Love/hate relationship with rich
- Mythology of the “self-made man”
- Enduring power of the “millionaire”
- Quest to crack the get-rich code
- “Are the rich happier than the rest of us?”
Rich
II Six Eras of the American Rich (1920-2009)
II Six Eras (1920-2009)
Era #1:
This Side of Paradise
1920-1929
Era #1: 1920-1929
World turned upside-down for American rich after WWI
- Era of Gilded Age robber barons over as modern times create a much
different kind of society
Era #1: 1920-1929
18th/19th century model of wealth
borrowed from European aristocracy
seen as anachronistic and musty
- Less elitist “New Economy” emerges which opens door to new kind of
American upper class
Era #1: 1920-1929
New Money begins to overtake Old
- Easy credit
- Stock market democratized
- Mass consumption society emerging
- Six times the number of millionaires in 1928 vs. 1923 (43,000 vs. 7,200)
Era #1: 1920-1929
Buying stock on margin makes many Americans rich on paper
- Speculators ride on coattails of professional investors
- $1 million no longer considered truly rich by 1929
- National phenomenon
Era #1: 1920-1929
American upper class redeemed
- Unlike robber barons (who used “the methods of their time”), fortunes being
made fair and square
- Country as a whole getting richer
Era #1: 1920-1929
New American rich seen as “the millionaire next door”
- Just rich vs. superrich
- Judeo-Christian values
- Solid work ethic
- Fewer prodigal sons
Era #1: 1920-1929
“Society” expanded and diluted
- Mrs. Astor’s “400” now 4000+
- Men mix business with socializing, usurping traditional role of women
Era #1: 1920-1929
American rich become more cosmopolitan
- European royalty welcomed into American society mix
- American heiresses swap fortunes for European titles
Era #1: 1920-1929
Youth culture rocks society’s boat
- Far more spontaneous, hedonistic, and iconoclastic than were their parents
- Rich young women driving, smoking, drinking, and canoodling
Era #1: 1920-1929
Those with real $ distance themselves from ordinary millionaires
- 200+ feet private yacht
- Marble swimming pool (Hollywood tycoons)
- Park Avenue duplex or triplex complete with (Prohibition-era) bar
Era #1: 1920-1929
Popular holiday gifts in 1929:
- Baby grand piano; radio with all the bells and whistles; “motor attire”;
smoking jackets; paisley robes; ermine, sable, and silver fox coats
- Santa about to get a lot more stingy
II Six Eras (1920-2009)
Era #2:
Brother, Can You Spare a Dime
1930-1945
Era #2: 1930-1945
Depression and war years further erode Old Money
- Many fortunes lost and institutions gone belly up after 1929 Crash
- Iconic trappings of wealth considered in bad taste and even “un-American”
Era #2: 1930-1945
Rich embrace “thrifty chic”
- Staff let go, country places closed
- Yachts in dry dock; pools drained
- Members resign from private clubs
- Family jewels pawned
- Cut back on restaurants and taxis
Era #2: 1930-1945
Rich in the crosshairs of the FDR administration
- Blamed for bringing on hard times
- Contrary to leftish agenda (wider distribution of wealth to ease social
unrest)
Era #2: 1930-1945
“Share the wealth” (or “soak the rich”) plan emerges to “weed out the over-
privileged”- Put $ back into system to rebalance
economy- “Death tax” proposed to put end to
family fortunes
Era #2: 1930-1945
Bill passes but does little to soak the rich- Not enough money to make any kind of
real impact- Usual tax dodges
- Upper class passes off wealth to heirs before Uncle Sam can get it
Era #2: 1930-1945
American rich rebound in late 1930s as new crop of millionaires are created by
fat defense contracts
- Wild cocktail parties
- 3-4 charity luncheons per week
- Private plane displaces private railroad car as vehicle of choice
Era #2: 1930-1945
Findings from 1939 Town & Country study of Americans with a butler:
- Average of 11 servants
- Total of 40 rooms in city townhouse and country house
- Average of 181 guests a month during summer and 138 in winter
Era #2: 1930-1945
Findings from 1939 Town & Country study of Americans with a butler:
- Average family consumes 1,163 bottles of booze a year (389 beer, 289 gin, 242
scotch, 214 rye, 193 wine, 157 champagne, 60 bourbon, 48 Irish whiskey, 47 brandy, 24 cordials)
Era #2: 1930-1945
Rich war refugees invade USA beginning in late 1930s
- Huge outflow of wealth from Europe
- Safe deposit box rentals increase 1,000% between 1939 and 1942
- Exiled royalty fodder for newspaper society columns
Era #2: 1930-1945
War throws a major cramp in the style of the American rich
- Big hotels/resorts taken over by military
- Polo fields used for marching, swimming pools for rehab
- Private clubs close, many to never open again
Era #2: 1930-1945
Rich join war effort
- Use yachts to patrol waters
- Enlist to become “millionaire privates”
- Society women do volunteer work
- Media exploits to demonstrate national unity and “Everyman-ness” of upper
class
II Six Eras (1920-2009)
Era #3:
If I Were a Rich Man
1946-1964
Era #3: 1946-1964
Old Money face two new threats from the arriviste
- Professional/managerial class
- Oil Money ($30 million = “Big Rich,”
$5 million = “Little Rich”)
Era #3: 1946-1964
Locus of American wealth culture shifts west by southwest
- Demand for oil, cotton, wheat, meat skyrockets
- Driller, rancher, and farmer millionaires pop up like daisies across Great Plains
and Panhandle
Era #3: 1946-1964
Stories about Big Rich become legendary- Col. Henry Russell buys new Rolls for his wife because it matches her blue hat- Wildcatters living in shacks use silver
for favorite meal- salt meat and beans- Texan millionaire to IRS agent: “Just
tell me how much you need to make ends meet, son.”
Era #3: 1946-1964
“Society” splits into three different (but overlapping) segments by 1960
- Café Society: Reliant on publicity/PR
- American Society: Official upper crust
- International Society: 2,400 gadabouts (Noel Coward, Aristotle Onassis, Duke
and Duchess of Windsor, etc.)
Era #3: 1946-1964
Social Register still the Bible of American Society
- First published in 1887
- Over 75,000 people in 11 cities in 1959 (no Texans)
- Wealth not a guarantee for admission
- Fame a major liability
Era #3: 1946-1964
Debutante ball remains staple ritual of American Society to perpetuate species
- Young women presented, often in multiple cities, to begin mating dance
- Henry Ford II spends $250,000 on coming out party for daughter Anne in
1961
Era #3: 1946-1964
Increasingly prosperous middle class blurs lines with upper class
- Middle class (often with credit cards and expense accounts) act rich
- Upper class forego (or just hide) trappings of the affluent to appear less
than rich
Era #3: 1946-1964
Bourgeoisie now define the American rich
- Proverbial men in the gray flannel suit
- “Egghead millionaires” (proto-geeks)
- Stock options/profit sharing drive wealth
- “Semi-Upper Class” in The Status Seekers (Vance Packard, 1959)
Era #3: 1946-1964
Symbols of wealthy elite recast as upper middle class
- Second homes, swimming pools, traveling internationally, admission to
Ivy League colleges
- No servants, large estates, yachts
Era #3: 1946-1964
Rise of “mass luxury”
- Big suburban houses with state of the art appliances and two+ car garage
- Boats
- Designer clothing
- Art, antiques, china, silver
Era #3: 1946-1964
Few remaining havens for Old Money lose luster as nouveau riche and less
than rich arrive in droves
- Old Guard country clubs
- Palm Beach, Newport
- The “right” address (e.g., Boston’s Commonwealth Avenue)
Six Eras (1920-2009)
Era #4:
Lord, Won’t You Buy Me a
Mercedes-Benz?
1965-1979
Era #4: 1965-1979
“Self-made man” (ambitious, energetic, confident entrepreneur) symbolic of
American rich in mid-1960s- LBJ’s “Great Society” giving consumers
money to spend- Rapidly changing technology
- Shift to service economy- Easy credit
Era #4: 1965-1979
Numbers of American rich still expanding
- Seven times as many millionaires in 1965 versus 1948
- 90,000 families (1 in 625)
- 40% women (on paper)
- Capital gains/dividends, real estate driving much wealth
Era #4: 1965-1979
“Superrich” segment identified by sociologists increasingly interested in
American rich in the late 1960s
- 153 American centamillionaires
($100 million +)
- J. Paul Getty, Howard Hughes at the top of the heap
Era #4: 1965-1979
Old Money
- Use cash or checks
- Sit in front of limos, chat with chauffer
- Use first names of staff
- Pick up golf balls < 5 feet from cup
- Obvious toupees
Era #4: 1965-1979
New Money
- Use credit cards
- Sit in back of limos, remain silent
- Use last names of staff
- Hole out all putts
- Natural-looking toupees
Era #4: 1965-1979
Mid-1970s “stagflation” reminiscent of dark days of Depression for rich
- Cut back on luxuries and lavish lifestyles to stay afloat (e.g. sparkling
wine rather than ‘62 Moet)- Sell (slightly used) yacht
- Trade in 8 mpg Cadillac for 32 mpg Mercedes diesel
Era #4: 1965-1979
Other ways rich stay rich:
- Leave Rolls in garage, borrow kid’s VW
- Let gardener go
- Plastic flowers
- Rummage sales
- Get a job
Era #4: 1965-1979
American rich getting younger and, slowly, more diverse
- Men in jeans and with long hair and beards
- A few businesswomen break through Old Boys Club
- Handful of African-American entrepreneurs become millionaires
Era #4: 1965-1979
Even newer kind of millionaire: lottery winners
- 13 states have lotteries in 1974 (to make up for budget shortfalls)
- Typical path: faint, hire lawyer, quit job, blow first $50,000 installment, move to bigger house in nicer neighborhood,
lose friends and identity
Era #4: 1965-1979
People in entertainment benefit from “media synergy” of 1970s
- TV: Johnny Carson, Barbara Walters, Henry Kissinger, Farrah Fawcett
- Authors: Colleen McCullough, Stephen King, Alex Haley
- Sports: Muhammad Ali, Steve Cauthen - Rock music: Peter Frampton
Era #4: 1965-1979
First real how-to-get-rich movement takes off in late 1970s as money becomes “in”- Michael Korda’s Success; Robert J. Ringer’s Looking Out for Number One; William Davis’s It’s No Sin to be Rich
- EST-like “Prosperity Training” seminars- “Lucre used to be filthy, but now it’s
lovely.” (Kenneth Lamott, 1977)
Six Eras (1920-2009)
Era #5:
Lifestyles of the Rich and Famous
1980-1994
Era #5: 1980-1994
1980s a perfect storm for creating new wealth
- Low inflation
- Falling interest rates
- Lower taxes
- Easy credit
- Ron and Nancy Reagan
Era #5: 1980-1994
Conspicuous consumption taken to new level
- Two-income, up-and-coming baby boomers catch money fever
- Thorsten Veblen officially starts rolling in his grave
Era #5: 1980-1994
Forbes introduces “400” list of richest Americans in 1982
- Most thorough investigation into the wealthy up to that point
- About 150 of 400 inherited wealth
- Remainder “self-made”
Era #5: 1980-1994
TV shows reflect and fuel interest in American rich
- Dallas, Dynasty, Knot’s Landing, Falcon Crest
- Lifestyles of the Rich and Famous (“an open ticket to the 22-karat core of
success”)
Era #5: 1980-1994
Financial deal-making now the way to get rich quick
- Takeovers, mergers, acquisitions, LBOs
- “Greed is good” ethos reminds some of robber barons and “the methods of their
time”
Era #5: 1980-1994
“Affluenza” identified as an affliction of children of the rich
- Loss of identity and general aimlessness often associated with alcohol, drugs,
and/or sundry other reckless behavior to fill the void
Era #5: 1980-1994
“Society” back in style after frumpy 70s
- New Money eager to social climb
- LA: A-list country club; neighborhood
- NYC: Dinner parties with “the right people;” art world; charity scene
- DC: Embassy state dinners
Era #5: 1980-1994
“Aristobrats” part of Society scene
- Rich, precocious 20- and 30somethings
- Archetype neatly captured in Whit Stillman’s three comedies of manners
(Metropolitan, Barcelona, The Last days of Disco)
Era #5: 1980-1994
Social Register getting thinner, however
- 32,500 in 1988 edition
- Heavily Northeastern
- Smattering of African Americans and Jews (no Latinos or Asian Americans)
- George Bush I the poster child
Era #5: 1980-1994
Rich now famous just for being rich
- Wall Street “paper entrepreneurs” (and Donald Trump) the rock stars of the 80s
- Money is “positively arousing” (Peter Drucker, 1987)
- Reading about superrich 1980s “pornography” (Tom Wolfe)
Era #5: 1980-1994
“Black Monday” (10/87) end of “eighties”- Boesky, Helmsley, Keating, Milken get
busted - Malcolm Forbes dies; Donald Trump
overleveraged- Dynasty, Dallas cancelled
- Bonfire of the Vanities (Tom Wolfe, 1987)
Six Eras (1920-2009)
Era #6
Who Wants to Be a Millionaire?
1995-2009
Era #6: 1995-2009
Vast fortunes created in mid-1990s virtually overnight
- Software companies go IPO- More Californians than New Yorkers on
Forbes 400 list in 1995- Average net worth of listee in 1996
exceeds $1 billion
Era #6: 1995-2009
Employees at all levels becoming instant millionaires (on paper)
- Tech company IPO a historic breakthrough in speed and equitability
- Challenge to traditional ways of getting rich (inheritance, education,
membership in Old Boys Club, and, if absolutely necessary, hard work)
Era #6: 1995-2009
New new rich not like the old new rich
- Two-bedroom rented apartment in San Jose vs. 50-room chalet in Lucerne
- More interested in playing Nintendo vs. collecting art or owning yacht
Era #6: 1995-2009
Techie tycoons learn fast how to spend $
- Xanadu-like homes
- Boeing 757s
- Silicon Valley = 12th largest economy in the world in 1999 (compared to
Florence during the Renaissance in terms of concentration of wealth)
Era #6: 1995-2009
Dot-com bubble fuels “hyper-consumerism”
- $6,000 Mont Blanc pens- Personal trainers for kids
- 66,000 square-foot houses- $35 million Boeing Business Jet (BBJ)
- Rent-a-celebrity (Stevie Wonder $750,000, Jerry Seinfeld $550,000)
Era #6: 1995-2009
Hedge funders replace dot-commers as leaders of the rich pack in early 2000s
- Merely rich (have-a-lots) envious of superrich (have-a-tons)
- “The billionaires are ruining it for the millionaires” (not-so-funny joke on
Nantucket)
Era #6: 1995-2009
Millionaire-mania strikes America
- The Automatic Millionaire
- One Minute Millionaire
- The Accidental Millionaire
- Discovering the Millionaire in Every Child
- How to Conceive a Millionaire?
Era #6: 1995-2009
New model of philanthropy emerges in late 1990s
- Charity gala more than a bit worn around the seams
- Techies finally start kicking in
Era #6: 1995-2009
“Social venture” model emerges out of West Coast tech boom
- “Investor donors” interested in “sustainable change” versus just writing
a check- Philanthropy seen as a business that
should be run like one and be held accountable for its actions
Era #6: 1995-2009
Today: golden age of philanthropy beckoning despite economic downturn
- $21 trillion predicted to be given away over next half-century (Paul Schervish,
Center of Wealth and Philanthropy, 1999)
Era #6: 1995-2009
Factors:- Biggest generation in history returning
to idealist roots - Celebrities aligned with causes
(philanthropy now cool) - Provides sense of purpose
- Makes one happy (really is better to give than receive)
Rich
III Wealthology™ Topline
III Wealthology™ Topline
Charge: explore and document the cultural dynamics of American
millionaires for JP Morgan
- Investable assets of $5 million+
- Segment by age, gender, and geography
III Wealthology™ Topline
Anthropologic/ethnographic approach to complement traditional (quantitative and
qualitative) research
- How people behave (choose to spend their time and money) vs. what they believe (attitudes, opinions, feelings,
etc.)
III Wealthology™ Topline
Key finding: 5 millionaire archetypes
- Archetypes not mutually exclusive- Each individual typically a composite
profile with primary, secondary, and sometimes tertiary core values
III Wealthology™ Topline
#1 Thrillionaires
Subscribe to the idea that money exists primarily to use
- Desire to enjoy the things and experiences that wealth can buy
- Symbols of wealth a reminder of one’s status and success
III Wealthology™ Topline
#2 Coolionaires
View aesthetics as the essence of life- Desire to surround oneself with beautiful
things and experiences- Wealth perceived as opportunity to
express one’s status as a person of refinement and sophistication
III Wealthology™ Topline
#3 Realionaires
Natural inclination to stay under the radar of the trappings of wealth
- Willingness to spend big money on things that matter but firm resolve to
save on things that don’t - Wealth = indicator one is astute
III Wealthology™ Topline
#4 Wellionaires
Grounded in the pursuit of 360 degree wellness
- Commitment to look good, feel healthy, and think positive
- Wealth used to convey that one is living a life in balance
III Wealthology™ Topline
#5 Willionaires
Recognize the privilege and responsibility to try to make the world a better place
- Determination to give back, make a mark, and ultimately be remembered
- Wealth = the opportunity to realize life’s biggest reward: helping others
III Wealthology™ Topline
Larry’s Hierarchy
Archetype #5: Willionaires----------
Archetype #4: Wellionaires-------------------------
Archetype #3: Realionaires-------------------------------------------
Archetype #2: Coolionaires--------------------------------
Archetype #1: Thrillionaires
Source: Culture Planning LLC
TIME &
MONEY
Rich
IV Conclusion
IV Conclusion
History of the American rich suggests that the more things have changed, the more they have remained the same
- “The love of wealth is…at the bottom of all that the Americans do.” (Alexis de
Tocqueville, 1835)
IV Conclusion
Biggest story: rise of the first mass-affluent class in history
- American rich discard foreign concepts of entitlement and family dynasty
- True to our democratic ideal of meritocracy vs. aristocracy
IV Conclusion
Most recent economic downturn just the latest bump in the long road of the
American rich- Conspicuous consumption considerably
less conspicuous - Reminiscent of 1930s and 1970s
IV Conclusion
Reality check: most American rich still rich by any historical or comparative
measure
- $1 million annual income vs. $10 million
- 70% of $10 million net worth = $7 million
IV Conclusion
American rich an incredibly adaptive creatures
- Like insects, they (or at least their money) will be around long after the rest
of us have disappeared
