Can We Conquer Our Grand Dynastic Family Fortunes?
A half-century later, Hills world of unimaginable wealth no longer existed. The latest research from Americas most astute wealth-distribution scholars, Emmanuel Saez and Gabriel Zucman of the University of California-Berkeley, has the wealth share of the nations top 0.1 percent peaking at close to 27 percent early in the 20th century. By the mid-1900s, that share had nudged below 10 percent. In mid-century America, corporations were simply no longer manufacturing mega millionaires. Stiff tax rates on top-bracket income  as high as 91 percent in the nearly two decades after World War II  and strong trade unions at the bargaining table wouldnt let them. Many of the top executives in some of our largest corporations have spent a lifetime in the field of industrial management without ever having been able to accumulate as much as a million dollars, Benjamin Fairless, chairman of the U. S. Steel board, would ruefully posit in the 1950s, And I know that to be fact because I happen to be one of them myself.  Investment bankers and swank Wall Street law firms felt the same downward pay pressure. In the mid-century years, notes journalist Malcolm Gladwell, principals in the nations top legal powerhouses would look wistfully at the days of opulence gone by. Roswell Magill, a partner at New Yorks eminent Cravath, Swaine & Moore, would acknowledge in 1956 that law firms can no longer honestly assure promising young men that if they become partners they can save money in substantial amounts, build country homes and gardens for themselves like their fathers and grandfathers did, and plan extensive European holidays.  Before the 1950s, emerging new industries had always created grand personal fortunes. Steel, auto, and oil had left the nations economic landscape littered with dynastic wealth. The two greatest economic transformations of the 1950s  the advent of television and the suburbanization of America  would create no lasting economic dynasties. Business analysts  from American Heritage, Forbes, Fortune, and the New York Times  have over recent years assembled inflation-adjusted lists of the richest Americans of all-time. Many of the fortunes on these lists grew to king size before the federal income tax first became a permanent economic fixture in 1913. The rest of the giant fortunes on these lists emerged after1980, when tax rates on the rich began their steep downward descent. None of the lists of the all-time richest Americans include any Americans who hit their economic peak in the mid-20th century. Mid-century America would, to be sure, still have rich people. But these would be rich people of a peculiar sort. In a 1969 book, New Yorker writer Kenneth Lamott would give the richest of his era a name. He would call them in fact the Income Tax Rich. That label made sense. You couldnt enjoy a great private fortune at mid-century unless you had a privileged relationship with Americas progressive tax system. You either had to have inherited your fortune from a time before taxes in the United States became steeply progressive. Or you had to have been doing your business in an industry  like oil  with loopholes that shielded you from Americas steeply graduated tax rates. Fortune magazines 1957 list of Americas richest would personalize that phenomenon. The Fortune list came divided into wealth tiers. In the top tier, between $700 million and $1 billion, the magazine would only unearth one contemporary American: oilman J. Paul Getty. In the second and third tiers, covering the range from $200 to $700 million, Fortune found 15 grand accumulations of wealth. Eight of these would be inherited, four more either directly or indirectly from oil. The historic mid-century soaking of Americas rich would climax under a Republican president. In 1960, at an auto industry dinner in Detroit, Dwight Eisenhower would give his own personal take on our economic world. Any society that tolerates a fabulously wealthy, he noted, is asking for trouble. Since time began, Ike reminded his comfortable corporate listeners, opulence has too often paved for a nation the way to depravity and ultimate destruction.  That depravity, Eisenhowers remarks went on to suggest, could also destroy us  if we foolishly chose to let the rich contribute far less than they should in taxes.  Our political elite, sadly, refused to follow Ikes advice. His successor in the White House, John Kennedy, asked Congress to drop the tax rate on top-bracket income from 91 to 65 percent. That rate would drop, soon after Kennedys death to 70 percent and then, under Ronald Reagan, to as low as 28 percent. The current top rate: 37 percent. Also precipitously down since the Kennedy years: the share of the nations private-sector workers carrying union cards. Thats dropped from over one-third of the labor force in the 1950s to under 7 percent. Rich people-friendly think tanks and political action committees  initially bankrolled in large part by Big Oil fortunes  have sped this shift along. Todays unconscionably more unequal America, a place where grand fortunes rule our roost and seem utterly unbeatable. But we beat those fortunes back before  and we can beat them back again. We just have to study how we once prevailed and why we couldnt sustain that success.