Money and the merry widows

Press, 12 October 1976, Page 21

Money and the merry widows

MICHAEL PYE,

in the "Sunday Times,” London.

There is bad news for fortune hunters, would-be founders of financial dynasties, and embryo Rockefellers. Even in the capitalist United States, the rich are failing to get richer.

This failure is seriously endangering an already vulnerable species — the millionaire’s heir. Most of the great fortunes of nine-teenth-century America — even of the 1920 s — have simply sunk without trace.

The evidence is a simple calculation: imagine that all the millionaires in the United States in 1922 simply sat on their assets, taking a modest 8 per cent on their investments, but earning nothing from work and spending nothing. By 1953. their unadv er.turous policy should, in theory, have expanded their personal wealth to $631 thousand million, despite the great stock market crash.

They should have owned 98 per cent of America — ■whose personal wealth, at 1953 figures, is reckoned to have been $642 thousand million. Yet the very’ top one per cent of Americans owned a paltry 27 per cent of wealth. Something had gone drastically wrong with the eco-system of those rich families.

Only the Astors held the family fortune together with fierce clauses in wills to ensure that it could not be split. Most other fortunes dwindled and were dissipated. Now, Stanley Lebergott. of Wesleyan University, Connecticut, has investigated the reasons why the fortunes were so quickly

shrunk. His account in the "Journal of Economic History” blames basic facts of family life for the sad decline of the super-rich. The problem is families. The average millionaire leaves less than SSM. But it is left to his wife — and an average of four children. Less than five per cent of all million-dol-lar estates go to one heir.

Widows menace fortunes. Usually, they survive rich husbands by at least 12 years. Their subsequent hunt for a smart aristocrat can bring disaster — the tobacco fortune of George Lorillard was bequeathed by his widow to the Count di Agreda; Mrs Isaac Singer, widow of the sewing machine maker, gave all to the Duke de Camposelice.

Daughters, too. had an unfortunate taste for Europeans at the turn of the century. They tended to marry’ men who were sometimes honourable, sometimes honest — but always expensive to run. Another Singer — Miss Winnaretta — went off with the Prince Poligniac. The Andrews fortune from tanning, and the Huntington railway millions ended as footnotes to obscure pages of the Almanach de Gotha — under Count von Linden and Prince Hatzfela, respectively.

Sons find other ways to spread the family cash. Frederic Mott, founder of General Motors, would have scorned the chaitable impulses which took half his fortune before his son had reached middle age.

And the Manville millions ended in gaudy notoriety with T. Franklyn Manville — who spent lavishly, gave generously, and married no fewer than 11 wives.

The demographics cf millionaires also tend to divide fortunes. In spite nf the high average size cf their families, a quarter of millionaires have no children. and roughly one in 10 is unmarried. With no family responsibilities, they can gratify any whim.

Stephen Girard was the richest man in the United States after the Napoleonic wars; he left $3 million to educate poor boys in Philadelphia, and a paltry $l4O 000 to be divided between other charities and a few deserving relatives. George Eastman, the founder of Eastman Kodak, left $75 million to education. Vassar and staid Johns Hopkins owe their existence to unmarried millionaires.

The "average million* aire,” Lebergott calculates, divides every $lOO of his estate, after paying debts, into: $4 for the lawyers and the undertakers, before anyone hears the will; $25 to the taxman and $l5 to charity to avoid tax; $l5 to his wife; and the remaining $4l to other relatives, friends, and institutions. The effect is to remove the concentration of wealth after just one generation.

So the motto seems clear: if you want to die rich — as well as live rich — marry a millionaire, not his or her heir.