Summer 2013 – Embarrassment of Riches?

A new book on the "problem of vast individual fortunes" is a little threadbare


The Good Rich and What They Cost Us
Robert Dalzell
Yale University Press, 2012,
$28, 199 pp.

Americans have always had a love-hate relationship with the rich. We’re fascinated by them and their living styles, we aspire to join their ranks—and yet we often denigrate them as mere money-making machines, somehow less than human. And many of us think we could give their money away more efficiently and to better purpose than they do themselves. Certainly in that latter category is Robert F. Dalzell Jr., an emeritus professor of history at Williams College.

Dalzell has written a curious little book that seems more stitched together from bits and pieces than written whole. Its early chapters are narrative history, telling the stories of several very rich Americans who lived in the four centuries the American colonies and republic have existed. He also specifies, at length, to what eleemosynary purposes they put their wealth. The rest of the book is a musing on the contradiction he sees between democracy and the existence of great wealth and the threat of a spreading gap between the very rich and everyone else.

Robert Keayne, perhaps the least known of Dalzell’s subjects, lived in Puritan Boston, became a successful merchant, and served as Speaker of the House in the General Court, Massachusetts Bay’s legislature. But he ran afoul of a medieval notion called the “just price,” and was accused of selling a cask of nails at a price above what the Rev. John Cotton thought was proper. The dispute was never really settled, and it clearly rankled Keayne deeply the rest of his life, as he explained himself at length in his will.

Dalzell’s second subject is George Washington, who is here treated not as the father of his country but as one of its richest citizens. He achieved this status by speculating in land, marrying a rich widow, and managing his and his wife’s estates with business-like care—all standard routes to fortune in 18th-century America. Dalzell’s next subjects are Amos and Abbott Lawrence, enormously successful textile manufacturers in early-19th-century Massachusetts as the Industrial Revolution began to affect the American economy. And then there are the Rockefellers—father, son, and grandsons—whose careers take up a considerable portion of the book.

In all his case studies, Dalzell concentrates on the philanthropy of these men, and the details he gives break no new ground. Keayne gave generously to establish such things as a place where merchants could trade protected from the weather. Washington’s greatest act of philanthropy is described as his decision to free his slaves in his will, establishing what amounted to a trust fund to care for those too elderly or sick to work. (We know from other sources that Washington also contributed regularly to the relief of those in debtor’s prison, and made the largest gift of the Founding era to what became Washington and Lee University.)

The Lawrence brothers differed as to where they should give their money, but each was generous with his own causes. And the Rockefellers, of course, became the greatest philanthropists in world history, funding everything from Rockefeller University to Colonial Williamsburg to the Virgin Islands National Park and making enormous contributions to the Metropolitan Museum of Art, the Museum of Modern Art, and more.

But Dalzell never really grapples with the different worlds these men lived in, an odd fault for so distinguished a historian. For instance, he never discusses the economic absurdity of the idea of the “just price,” and why a merchant like Robert Keayne might object to being told by a clergyman what that price was. Nor does he discuss how the moral climate regarding slavery underwent a fundamental change in Washington’s lifetime. The reader would never know from this book that John D. Rockefeller made his titanic fortune while the rules of democratic capitalism were being thrashed out in the political marketplace, although he does note that Rockefeller broke no laws in place at the time.

The second half of the book is even more problematic. Dalzell decries the fact that the rich are so much richer today than they were half a century ago, both in absolute wealth and relative to the rest of us. But he never comes to grips with why that is so.

Instead Dalzell assumes, as is clear in the book’s title, that these fortunes are the result of faulty public policy, especially taxation and the charitable deduction, and thus “cost us” what would otherwise be applied to public purposes. But he never actually makes the argument that the rich cost us anything. He simply ignores the fact, for instance, that the makers of tremendous fortunes make us all richer by providing better goods and services than were previously available. That, after all, is how they got so rich.

Nor does he deal with the possible real-world consequences of aggressively narrowing the gap between the fortunes of the very rich and everyone else through government policy. How would that affect the willingness to take risks and work hard? Dalzell doesn’t say.

Dalzell plays with the numbers provided by the Forbes 400 list, but not altogether fairly. He makes much of the fact, for instance, that some members of the list are related to others on the list. This is an attempt to show that there is a self-perpetuating aristocracy of wealth in this country, much as there has been in Europe for hundreds of years. But the fact that there are six Waltons on the list is not very surprising, given that they are immediate relatives of the man who generated a fortune at Walmart within just the last two or three decades. American economic patterns strongly suggest that two or three generations from now, Walton offspring will be footnotes rather than Forbes-list moguls.

In fact, what is most interesting about the Forbes 400 list is how new these fortunes are. Of all the legendarily rich families of a hundred years ago—Whitney, Morgan, Harriman, Vanderbilt, Astor, etc.—only the Rockefeller family today holds one of the top 400 biggest American fortunes, and that not even in the top 100. America’s aristocracy of wealth has always been of the nouveau riche variety.

Also unmentioned is the real reason the rich are getting so much richer these days: the technological revolution being brought about by the microprocessor. This has opened vast new market niches in the economic ecosystem. Whenever there has been a profound technological development—from the full-rigged ship of the 15th century to the steam engine of the 18th to the railroad of the 19th to the automobile of the 20th—there has always been an explosion of new and larger fortunes. The microprocessor is at least as profound a technology as the stream engine and it has led to an even larger inflorescence of new fortunes. And not just directly with the likes of Bill Gates, Michael Dell, and Mark Zuckerberg; such fortunes as Michael Bloomberg’s in journalism and Sam Walton’s in retailing would not have been possible without the computer. And for every member of the Forbes 400, there are hundreds who have created smaller fortunes.

In short, The Good Rich and What They Cost Us is half potted history and half poorly argued polemic.

Contributing editor John Steele Gordon is the author of An Empire of Wealth: The Epic History of American Economic Power.